KEY POINTS
• An economist says Dangote Refinery’s latest petrol price increase will raise transport and business costs.
• He warned that higher energy costs could put further pressure on food prices and inflation.
• He urged the Federal Government to strengthen domestic crude supply and expand CNG as an alternative to petrol.
MAIN STORY
The latest increase in Dangote Refinery’s petrol gantry price could further raise transportation and business costs while reducing household purchasing power, economist Kenneth Ife has said.
Ife, President of the Institute of Professional Economists and Policy Management (IPEPM), said this in an interview with the News Agency of Nigeria (NAN) on Sunday in Lagos.
Dangote Refinery increased its petrol gantry price from N1,265 to N1,350 per litre on Sept. 12, marking the fourth increase since Aug. 21.
The latest adjustment has taken the cumulative increase to N185 per litre, representing a 15.9 per cent rise within 22 days.
Ife said the effect of higher petrol prices would extend beyond motorists as increased transport and energy costs feed into the wider economy.
He warned that food prices and inflation could come under additional pressure as businesses face higher costs for transportation, imported goods and industrial raw materials.
“The petrol price increase transmits directly to shrinkage in household purchasing power,” he said.
According to Ife, higher transport costs could also worsen food and energy insecurity, while rising production expenses could make Nigerian businesses less competitive in regional and international markets.
He said international crude prices could place further pressure on petrol prices if disruptions to global oil supplies persisted.
Ife noted that Bonny Light had risen to $112 per barrel before falling to $108, adding that further tensions around major oil producing countries and important shipping routes could push crude prices higher.
He also pointed to recent attacks on Saudi energy infrastructure and disruptions around major shipping routes as factors contributing to concerns over global oil supplies.
Rather than restoring petrol subsidies, Ife urged the Federal Government to focus on measures that could lower domestic fuel costs while allowing market forces to determine prices.
He called for full implementation of the Petroleum Industry Act and stronger domestic crude supply to Nigerian refineries.
“The government can get Nigerian National Petroleum Company Ltd. to supply the full complement of crude required by local refining capacities,” he said.
“Under the PIA, domestic crude supply operates on a willing supplier, willing buyer basis, with the regulator empowered to establish a Domestic Crude Supply Obligation,” he added.
Ife also called for faster expansion of Compressed Natural Gas as an alternative fuel for the transport sector.
He proposed partnerships with filling station operators to increase CNG infrastructure and accelerate vehicle conversion, arguing that broader adoption could reduce dependence on petrol and ease energy costs for households and businesses.
“The government can rapidly accelerate the CNG gas expansion and capacity utilisation by taking CNG to the mass market,” he said.
The Presidential Initiative on CNG and Electric Vehicles currently reports more than 400 certified conversion centres and over 90 CNG refuelling stations nationwide.
The initiative was introduced to expand CNG infrastructure and reduce transportation costs following the removal of petrol subsidies.
THE ISSUES
- Higher petrol prices can affect households beyond the cost of filling vehicles because transportation expenses feed into the prices of goods and services moved across the country.
- Businesses also face higher operating costs when fuel becomes more expensive, particularly those that depend on petrol for transportation, logistics and other activities.
- Rising energy and transport costs can add to existing inflationary pressure by increasing the cost of production and distribution across different sectors.
- Greater use of CNG could provide an alternative for transport operators and reduce dependence on petrol, but this would require wider access to refuelling infrastructure and vehicle conversion facilities.
WHAT’S BEING SAID
“The petrol price increase transmits directly to shrinkage in household purchasing power.” – Kenneth Ife, President, IPEPM
“Cost push inflation will be aided by the rising input cost.” – Kenneth Ife, President, IPEPM
“The government can rapidly accelerate the CNG gas expansion and capacity utilisation by taking CNG to the mass market.” – Kenneth Ife, President, IPEPM
WHAT’S NEXT
Ife wants the Federal Government to strengthen domestic crude supply to local refineries, fully implement relevant provisions of the PIA and accelerate CNG deployment and vehicle conversion.
BOTTOM LINE
The latest Dangote petrol price increase could raise transportation and operating costs across the economy, with possible effects on household purchasing power and inflation. The economist is proposing stronger domestic crude supply and wider CNG adoption as alternatives to petrol subsidies.
