In May, the average pump price of fuel hit an average of N150.3 per litre for the 36 states of the federation and the Federal Capital territory (FCT), above the fixed upper price limit for the retail pump price of N145/l set the same month.
The average price of gasoline in May represented a 27% y/y increase from the corresponding period in 2015. Ebonyi had the highest price (N165/l).
According to the report, only twelve states had their pump price at N145/l, including Lagos and Abuja. This may be due to poor regulatory checks and sharp practices.
The May inflation report showed that transportation prices rose by 15.6% y/y, driven by the new upper price limit for retail sales. This component has a 6.5% weighting in the consumer price index.
The new pricing regime has reduced the incentive to smuggle Nigeria’s fuel across borders as the trade is now no longer very profitable.
The rise in price has also led to a reduction in consumption. Major marketers have stated that petrol sales have declined by 40% on the back of the new price. In the meantime, the new foreign exchange (Forex) policy brings a more market-oriented rate for the naira. The hike in the price of PMS announced in May was on the basis of an assumed exchange rate for importers of N285/US$.
