PENGASSAN Reveals Real Reason Behind Imminent Petrol Price Hike

PENGASSAN discloses the factors driving an expected increase in petrol prices in the coming weeks, citing supply challenges and global market trends.

Festus Osifo, the President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), has cautioned that if global crude oil prices continue to rise, it may lead to an increase in the cost of Premium Motor Spirit (PMS), also known as petrol.

At the PENGASSAN National Executive Council Meeting in Lagos on Thursday, Osifo discussed how increasing crude oil prices are linked to Nigeria’s foreign exchange issues. He warned that this connection could result in higher fuel prices.

“The price of crude oil increased to $80 per barrel today. Unless there are improvements in the exchange rate, PMS prices will rise in the coming weeks,” Osifo remarked.

He linked the high fuel prices across the nation to fluctuations in the exchange rate, despite domestic refineries gradually resuming operations. However, he observed that these facilities were still not functioning at full capacity.

Clarifying misunderstandings regarding the refining process, Osifo emphasized that producing high-quality PMS requires substantial blending and processing. “The old Port Harcourt refinery is operational, and there has been notable advancement at both the Kaduna and Port Harcourt refineries,” he stated. “Blending operations are a standard procedure for refineries worldwide.”

Osifo attributed the increasing petrol prices to the depreciation of the naira, noting that a stronger exchange rate might stabilize PMS costs.

“The cost of PMS is closely tied to the weakness of the naira. If the exchange rate falls below N1,000 per dollar, PMS might be priced between N500 and N600 per litre,” he mentioned.

Osifo highlighted the critical role of currency management in the oil and gas sector, drawing parallels with countries such as Venezuela and Zimbabwe. He emphasized that this industry heavily depends on U.S. dollars for essential aspects like equipment, operations, and expatriate salaries.

Regarding local refining, he dismissed the notion that it would automatically result in significantly lower prices. He stressed the importance of maintaining cost margins by stating, “Producing locally does not imply selling below cost. Just like farmers assess their production costs before adding a margin,” he explained.

In another discussion, Osifo expressed disapproval of Nigeria’s proposed 2025 budget of ₦49 trillion (about $30 billion), calling it insufficient for a nation with over 230 million people.

He stated, “A $30 billion budget is extremely low for a country like Nigeria. In comparison, South Africa, with a population of around 60 million, manages on a budget exceeding $120 billion.”

He encouraged the Nigerian government to tap into its extensive natural and mineral resources in order to boost revenue and lessen dependency on borrowing.