The removal of the peg on the naira thus allowing for a free float will force a review of the assumptions that led to the pump price of petrol at N488 per litre in Lagos, industry operators say.
Nigeria’s state-owned oil company, the Nigerian National Petroleum Company Limited (NNPCL) last month issued price guidance for its over 900 retail petrol stations and other marketers promptly adopted it.
These assumptions would however change as Naira rates converge with the parallel market rate which currently trades above N750/$1.
BusinessDay had earlier reported that the eventual exchange rate would determine petrol prices at the pump as Nigeria’s lack of refining capacity means it imports all the petroleum products it uses locally.
At the current petrol pricing template, the pump price of petroleum products will sell above N590 in Lagos. If the rate converges at N750 as some bankers tell BusinessDay, petrol prices will surge leaving the most efficient operator with relatively cheaper prices.
An analysis of the pricing template shows that product cost at N503.91 per litre and other costs including trader’s margin, freight, NPA port charges, NIMASA, financing costs, jetty storage, and wholesale margin bring the landing cost to N565.34. When retailers’ margins, dealers’ margins and transport costs are added, it brings the price in Lagos to N590.34.
The price could average around N600 – N650 when it is transported across Nigeria, calculations show.
