As the second week of December 2024 draws to a close, fuel station prices for Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), and Liquefied Petroleum Gas (LPG) continue to show significant regional disparities, with prices influenced by various factors such as logistics challenges, global market trends, and subsidy removals. These variations highlight the complex dynamics of Nigeria’s fuel pricing structure.
PMS (Petrol): Persistent Regional Disparities
The fuel subsidy removal earlier this year has had a lasting impact on the prices of Premium Motor Spirit (PMS), commonly known as petrol. Across the country, the price of petrol remains volatile, with significant price differences from one region to another.
In the South-Western region, particularly Lagos, the average price of petrol is between ₦1,000 and ₦1,100 per litre. This is relatively stable compared to other parts of the country, thanks to the region’s proximity to key distribution depots and ports. However, in Northern states like Kano and Sokoto, the price per litre is higher, ranging from ₦1,200 to ₦1,300. This price hike can be attributed to increased logistical expenses stemming from transportation challenges.
In the South-East, petrol prices have shown a slight increase due to sustained demand pressures and the added costs associated with distribution, with average prices hovering around ₦1,350 per litre.
Diesel (AGO): High Costs Strain Industries
The price of diesel (AGO) has remained high throughout 2024, placing significant strain on industries that rely on it, especially in sectors such as transportation and power generation. Across the Southern and Western regions, diesel is priced around ₦1,300 per litre, with some fluctuations depending on local market conditions.
However, in the Northern and Eastern regions, diesel prices are noticeably higher, sometimes reaching ₦1,500 per litre. The elevated cost of diesel has had a direct impact on businesses and industries, particularly those operating in rural areas where the cost of delivery is higher due to longer supply routes. This has led to an increase in operational costs, with some smaller businesses struggling to absorb the rising energy expenses.
LPG: Slight Decline Amid Seasonal Demand
Liquefied Petroleum Gas (LPG) prices have experienced a marginal decline in December compared to the previous month. In urban centres such as Lagos, Abuja, and Port Harcourt, the cost of a 12.5kg LPG cylinder averages ₦16,800, marking a slight reduction in line with Nigeria’s efforts to promote cleaner energy alternatives. This decrease can be attributed to the increase in local production of LPG, which has helped stabilize prices.
However, in rural areas, where distribution networks are less efficient, LPG prices remain higher, ranging from ₦17,500 to ₦18,000 per 12.5kg cylinder. The disparity in LPG prices between urban and rural areas continues to be a challenge, particularly as the government pushes for greater adoption of cleaner cooking alternatives across the country.
Regional Analysis: Key Drivers of Price Variations
- Northern Nigeria: Fuel prices remain higher in the North due to the combined effects of transportation costs and security concerns, which affect the efficiency of supply chains. The region’s reliance on road transport for fuel delivery adds to the cost burden, making fuel less affordable for consumers.
- South-East: The South-East region faces consistent price pressure due to high demand for fuel, particularly diesel and PMS. This is compounded by challenges in fuel distribution, with transportation networks and infrastructure sometimes struggling to meet demand during peak seasons.
- South-West: In contrast, the South-West benefits from its proximity to major distribution depots and ports, which helps keep fuel prices relatively stable. This region also sees competitive pricing for LPG, thanks to better supply chains and infrastructure development.
Outlook for December 2024
As the festive season approaches, fuel prices are likely to either remain stable or experience a slight increase, driven by higher demand for transportation. The end-of-year period traditionally sees a surge in fuel consumption as Nigerians travel for the holidays, putting additional pressure on fuel supply chains.
In the long term, the Nigerian government’s push to promote the use of Compressed Natural Gas (CNG) as a substitute for PMS and diesel could offer some relief, particularly if the necessary infrastructure for CNG distribution is developed. However, the adoption of this alternative fuel source will depend on a number of factors, including government policy, investment in infrastructure, and public willingness to switch to CNG-powered vehicles.
Conclusion: Addressing Regional Disparities and Supply Chain Challenges
To manage the ongoing disparities in fuel pricing across Nigeria, it will be crucial for the government to address inefficiencies in the supply chain, which contribute to price variations. A more uniform distribution network, better transportation logistics, and continued investments in local fuel production could help mitigate some of the regional price differences. Furthermore, enhancing the infrastructure for alternative fuels like CNG could provide a longer-term solution to the nation’s energy challenges.
By monitoring these regional price trends and taking action to address the root causes of disparities, Nigeria can better manage its energy transition while striving for affordable fuel prices for all citizens.
