September 29, 2023/CSL Research
Based on reports from the National Bureau of Statistics (NBS) the price of Automotive Gas Oil (Diesel) advanced by 8.57% y/y and 7.53% m/m to an average price of N854.32/litre across the states of Nigeria from N786.88/litre and N794.48/litre recorded in August 2022 and July 2023 respectively. The highest prices of Diesel were recorded in Abia state at N970/litre followed by Niger with an average price of N960.14/litre. On the other hand, Bayelsa and Katsina states recorded the lowest Diesel prices at N700/litre and N771.43/litre respectively.
Retailers sold Premium Motor Spirit (PMS) popularly referred to as petrol at an average price of N626.70/litre across the states of Nigeria during the month of August, a 230.78% y/y rise in price when compared to the average PMS price of N189.46/litre recorded in August 2022. The PMS price in August was yet another rise in the fuel price. Since its deregulation, the price of PMS has gone from N545.83/litre in June 2023 to N600.35/litre in July 2023 and N626.70/litre in August.
With supply cuts on crude oil in the international market, the price of the benchmark Brent crude has been on the rise, closing at US$95.14 bbl (+10.74% ytd) as of 28 September 2023. This is expected to trickle down to higher cost of refined products including PMS. More so, the continuous weakening of the Naira against the US dollars should also lead to a rise in the cost of refined oil products. There have been expectations of another increase in the pump price of PMS given the rise in crude oil price but this has not happened, making many believe that the subsidy is possibly back.
That said, we believe the N5bn palliative given to all the states by the Federal Government will not in any way provide the needed cushion when compared with the increase in petrol price and the associated increase in prices of other goods and service. Also, given the way covid palliatives went, it is almost certain that targeting will be a major problem. A better use of government resources in our view will be providing free bus transit, which will certainly be targeted at the poor as the rich will most likely not get on a bus.
