- The recent floating of the naira will cause a jump in the price of petro, analysts predict
- Others disagree that the policy, which seeks to unify Nigeria’s chaotic exchange rate, will encourage the importation of petrol
- They say with the policy taking away forex control from the CBN; marketers can now access the dollar at the official rate in any bank
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The naira float introduced by the Central Bank of Nigeria (CBN), aiming to unify Nigeria’s exchange rate, will force a petrol price review, which the Nigerian National Petroleum Company Limited (NNPCL) currently pegged at N488 per litre for its retail outlets in Lagos.
Outside Lagos, the price of petrol is forecasted to sell at N650 per litre.
NNPC fuel price likely to change due to new naira policy
NNPC issued a petrol price guidance for its retail outlets, which other marketers quickly adopted.
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Analysts believe that as the naira converges with the parallel market, which currently trades at over N700 per dollar, the convergence would push petrol prices up as importers source for forex from the banks.
But energy policy analyst Adeola Yusuf believes that the floating of the naira will not affect the petrol price.
Yusuf told Legit.ng, in an interview, that the policy will encourage the importation of petrol by marketers.
Analysts predict price stabilisation
“The cardinal of that policy is that all commercial banks will start transactions in dollars, unlike before when every dollar transaction is domiciled with the CBN. The unavailability of the dollar had made the demand for it rise.
“Now that they want to balance the supply, you can enter any bank and buy at the official rate. It will crash the dollar value eventually, leading to the harmonisation of the black market rate and the official rate.
“After the fuel subsidy removal, what is expected is to have a free market where it will not be only NNPC that will be importing petroleum products. The excuse major oil marketers had in the past is that they find it difficult to access dollars and that only the NNPC has access to dollars at the official exchange rate. So, there is nowhere they can compete with the NNPC.”
He said the new policy enables oil marketers to walk into any bank and get dollars, eliminating the excuse of lack of forex.
Price of petrol to inch closer to diesel price
According to him, the policy might affect the price initially, but eventually, it will stabilise and could even drive down the price.
Yusuf said the initial crash of the naira was caused by market shock but noted that the market would adapt and stabilise the naira.
Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PwC, said in a Twitter post that the new policy would affect the price of petrol.
Oyedele said it will cause a “possible impact on the pump price of petrol which could inch closer to the current pump price of diesel.”
According to a BusinessDay report, the eventual exchange rate would decide petrol prices at the pump as the country imports refined products.
It is believed that at the current price regime, the pump price of petrol will be above N590 in Lagos, and if the exchange rate unifies at N750 per dollar, the petrol price could surge.
Subsidy: NNPC adjusts petrol prices in Lagos, Abuja and Port Harcourt
Legit.ng reported that the Nigeria National Petroleum Company (NPPC) Limited adjusted its petrol prices across three major Nigerian cities on Wednesday, May 31, 2023, to reflect the new reality of petrol subsidy removal.
The adjustment provides clarity after removing the controversial subsidy regime that gulps almost $10 billion annually.
According to reporting by BusinessDay, the new development is noticeable in Lagos, where the NNPC’s retail outlets sell a litre of petrol for N488. In contrast, it sells a litre of petrol for N511 in Port Harcourt, the Rivers State capital.