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Kenyans, Indians groan over petrol price hike

Kenyans, Indians groan over petrol price hike
March 16
17:00 2021

“Motorists and passengers have expressed outrage at the government’s decision to increase the price of petrol.” This is the news from Kenya… and Nigeria if you consider Friday’s incident.

The Petroleum Products Pricing Regulatory Agency (PPPRA) published a petrol pricing template on its website on Thursday, March 11, where it pegged the recommended retail price at between N209.61 and N212.61 per litre.

The ex-depot price, which is the rate marketers get the product, was fixed at N206.42.

The federal government and Nigerian National Petroleum Corporation (NNPC), however, assured Nigerians that there would be no increase in the price of petrol in March.

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The PPPRA subsequently deleted the template from its website.

Checks by TheCable showed that the increase (or anticipated increase) in the price of petrol is not peculiar to Nigeria.

  • United States of America (USA): Data obtained from the US Energy Information Administration(EIA) shows that the national average price of petrol has increased from $2.42 per gallon in February to $2.77 per gallon as of March 8 and $2.85 as of March 15.
  • Kenya: The Energy and Petroleum Regulatory Authority (ERPA) has increased the prices of refined petroleum products every month since 2021 began. The agency increased the price of petrol from 115.18 Kenyan shillings per litre ($1.08) in February to 122.81 Kenyan shillings per litre ($1.12) in March. The prices of petrol and diesel were also affected.
  • India: In New Dehli, the Indian capital, the price of petrol has increased from 89.54 rupees ($1.23) in February to 91.17 rupees ($1.26) in March.
  • Ghana: Nigeria’s West African neighbour has also witnessed an upward movement in petrol price. The retail price of petrol has been adjusted five times since 2021 began. A litre of petrol cost 4.94 Ghanaian cedis ($0.86) per litre on February 3, 2021; the price increased to 5.47 cedis ($0.95) by March 3.

However, the price of petrol has remained unchanged in Nigeria at N162 per litre ($0.33) since December.

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Petrol price across countries

Why is the price of petrol increasing?

In three simple words — crude oil prices.

In the US, the price of crude oil forms 52 percent of the final price of the refined petrol

What makes up petrol price in the US

In March 2020, Nigeria adopted a price modulation policy where international crude oil prices and associated landing costs in Nigeria are used to determine the retail price of petrol.

During the thick of the pandemic in 2020, crude oil prices crashed to as low as $26 per barrel resulting in a drop in petrol price in Nigeria.

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At the time, the petrol price was reduced from N145 to N125 per litre as crude oil was sold for about $26 per barrel and reviewed downwards to N123.50

The N162 pump price was set when crude oil traded just above $43 per barrel.

Goldman Sachs Commodities Research recently projected that the price of Brent crude will hit $75 by the second quarter and $80 by the third quarter of 2021.

If this happens, an increase in the price of petrol is almost inevitable — except the government resumes subsidy payment.

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