Pump price of petrol may increase with the rise in Brent crude, which has stabilised around $35 per barrel, a report says.
The commodity appreciated by $0.48 when compared to the previous day’s rate, although crude oil in the Organisation of Petroleum Exporting Countries (OPEC) basket maintained a flat rate of $28.43 per barrel on Monday.
However, global oil figures showed that Brent Weighted Average in the past four days was higher than the commodity’s rate on Monday, as the BWA was put at $36.32 per barrel.
Operators in Nigeria’s downstream sector said the increase in oil price was good for the country in terms of foreign exchange earnings.
The Petroleum Products Pricing Regulatory Agency (PPPRA) had crashed the pump price of petrol from N145 per litre to N125 per litre on March 19, 2020, as it declared the commencement of a market-based pricing regime.
PPPRA further reduced the price to N123.5 per litre in April 2020 due to the crash of crude oil price, as the commodity had traded below $30 per barrel for several weeks.
“But considering the recent rise in crude oil price, it is highly possible to see an upward movement in the price of petrol soon,” the report quoted a source to have said.
The official noted that the agency’s boss had earlier explained that henceforth, the cost of petrol would be determined by the international market price of crude.
“Price will naturally be adjusted to reflect a true picture of market fundamentals at any particular period, high or low,” the PPPRA’s Executive Secretary, Abdulkadir Saidu, had stated while answering questions on the new petrol price regime in Nigeria.
Saidu had earlier said that Nigerians should be ready to pay higher or lower prices for petrol following the liberalisation scheme currently in place.
The PPPRA boss, however, noted that efforts were being made to develop alternative fuels to petrol by deepening the utilisation of Liquefied Petroleum Gas/Compressed Natural Gas as auto gas to help cushion the effect of petrol price increase.
Billy Gillis-Garry, the National President, Petroleum Products Retail Outlets Owners Association of Nigeria, said market forces would determine petrol price and this could result in an increase in the petrol cost.
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Responding to whether there would be an increase in petrol price going by the upward swing in the cost of Brent, he replied, “Well, the reality is that market forces will determine petrol price.”