Petrol Landing Cost Rises To N282/litre, Oil Hits $90 – Reports

Emerging reports have claimed that the landing cost of Premium Motor Spirit (petrol) imported into Nigeria to over N282 per litre.

Prime Business Africa gathered that the further rise in the landing cost of petrol means increased subsidy as the pump price of the product remains steady at N162-N165 per litre.

The landing cost of the product rose to N282.29 per litre on January 20 as the international oil benchmark, Brent crude, jumped to $89.75 per barrel that day from $77.24 per barrel on December 31, 2021.

Brent rose further on Wednesday to $90.22 per barrel as of 5.19 pm Nigerian time, its highest level since 2014.

The sharp rise in global oil prices to record highs has pushed the subsidy cost being incurred by the Federal Government.

Marketers have increased the price of Automotive Gas Oil, also known as diesel, to N355-N360 per litre.

The Petroleum Products Pricing Regulatory Agency had in March last year released a pricing template that indicated the guiding prices for the month.

The template, which showed that petrol pump price was expected to range from N209.61 to N212.61 per litre, was greeted with widespread public outcry and was later deleted by the agency from its website.

It was based on an average oil price of $62.22 per barrel, and the landing cost of petrol was put at N189.61 per litre.

Based on the PPPRA template and Platts data, the expected pump price of petrol rose to N305.29 per litre on January 20, 2022 from N299.94 per litre on October 8, 2021.

The expected retail price of N299.94 per litre and the current pump price of N162 per litre indicate a subsidy of N143.29 per litre as January 20.

The rising price of crude oil pushed the cost of petrol quoted on Platts to $837.75 per metric tonne (N260.09 per litre, using the I&E rate of N416.33/$1) on January 20, 2020 from $754.75 per MT on December 31, 2021, with a freight cost of $26.77 per MT (N8.31 per litre).

Other cost elements that make up the landing cost include lightering expenses (N4.81), Nigerian Ports Authority charge (N2.49), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N2.17).

The pump price is the sum of the landing cost, wholesaler margin (N4.03), admin charge (N1.23), transporters allowance (N3.89), bridging fund (N7.51), marine transport average (N0.15), and retailer margin (N6.19).