As Nigeria faces an ongoing economic crisis characterized by soaring inflation and rising fuel costs, recent warnings from industry leaders suggest that petrol prices may continue to climb. Gabriel Ogbechie, the Group Managing Director of Rainoil Ltd, has alerted Nigerians to prepare for further increases in petrol prices due to the federal government's plans to fully deregulate the downstream sector and eliminate subsidies. Since May 29, 2023, petrol prices have surged from ₦175 per liter to a staggering ₦1,300 per liter, with predictions indicating that prices could fluctuate between ₦1,000 and ₦1,060 in coastal areas, potentially reaching ₦1,300 in northern regions [e4e661c0].
This alarming trend comes on the heels of a broader economic landscape where food prices have already risen significantly, with bread prices increasing by 76.5% year-on-year, driven by high exchange rates and wheat scarcity [5af73609]. The inflation rate in Nigeria was reported at 32.15% in August 2024, exacerbating the financial strain on households [6099f2dd].
While Ogbechie emphasizes that petrol prices will be influenced by fluctuations in crude oil prices and exchange rates, Dr. Joseph Obele offers a contrasting perspective, suggesting that prices could drop below ₦600 with the government's crude-for-naira initiative, which aims to stabilize the economy [e4e661c0]. The federal government is also encouraging the Nigerian National Petroleum Corporation (NNPC) to invest in local refineries, which could provide some relief in the long term.
The removal of fuel subsidies has already had a profound impact, with petrol prices skyrocketing from ₦198 to ₦1,030 per liter over the past 18 months, further straining household budgets and contributing to overall inflationary pressure [6099f2dd]. As the Federal Government raises the landing cost of imported petrol, which now totals ₦956.13 per liter, the implications for food prices, including bread, are becoming increasingly dire [2aa9553e].
Experts suggest that to alleviate the economic burden on citizens, the government should consider raising the minimum wage, subsidizing essential goods, and implementing tax reforms. Successful Nigerian startups like Flutterwave and Paystack highlight the potential of entrepreneurship in driving economic growth, but government support through access to funding, tax incentives, and infrastructure development is crucial [6f6a698b].
As the situation continues to evolve, the urgent need for policy adjustments to support vulnerable populations remains critical. The anticipated delivery of 400,000 tonnes of wheat worth ₦194 billion in August 2024 may provide some relief to bakers but does little to alleviate the immediate pressures faced by consumers [5af73609].