Can Nigeria accommodate further petrol price hikes?

Oil marketers in Nigeria are advocating for market indicators to dictate the price movement of petrol, even if it means prices could soar to 700 naira per litre. Temitope Kolade, Senior Manager of the Power, Oil, and Gas Unit at Andersen Nigeria, recently addressed this contentious issue on CNBC Africa. The discussion delved into the complexities of the downstream oil marketing sector and the potential impact of various factors on petrol prices in the country. Kolade highlighted the current dominance of the Nigerian National Petroleum Corporation (NNPC) in petrol imports, indicating that true market forces are yet to fully influence pricing. He emphasized the significance of multiple importers participating to establish a more competitive market environment. Kolade explained that petrol prices are heavily influenced by factors such as crude oil prices, foreign exchange rates, and Nigeria's reliance on imports. The conversation also touched on the role of the Dangote oil refinery in potentially stabilizing petrol prices and reducing foreign exchange pressures. While the refinery was anticipated to alleviate import burdens and impact pricing positively, Kolade suggested that its full effects have not materialized. He noted that until Nigeria addresses underlying structural issues and promotes intra-Africa trade, petrol price predictability will remain a challenge. Addressing Nigeria's OPEC production quota, Kolade expressed optimism for increased production but underscored the crucial need for enhanced security measures. He stressed that curbing oil theft and vandalism is vital for boosting oil output and revenue generation. Kolade urged the government to prioritize security efforts to drive improvements in production levels and overall foreign exchange earnings. He warned that inconsistent security measures could hinder progress and emphasized the urgency of a sustained security strategy. In conclusion, Kolade emphasized the interconnectedness of security, production, and petrol pricing in Nigeria's oil sector. As the country grapples with market fluctuations and external pressures, strategic interventions in security and production optimization are deemed essential to mitigate challenges and foster a more stable economic environment.