Nigeria is reeling from the economic shockwaves triggered by a sharp increase in the pump price of Premium Motor Spirit (PMS), commonly known as fuel. The Nigerian National Petroleum Company Limited (NNPC) hiked the official price to ₦998 per litre, while many private filling stations have reportedly crossed the ₦1,000 per litre mark. This development is sparking widespread concern across various sectors of the economy and daily life.
Immediate Impact on Citizens
The price surge has hit ordinary Nigerians hard, particularly those on low incomes. Daily commuters, small businesses reliant on generators, and households are feeling the brunt of the hike. “It’s a disaster,” said Samuel Olatunde, a taxi driver in Lagos. “I’ve had to double my fares just to keep up with fuel costs, but even then, passengers are fewer because they can’t afford it.”
Transport costs have skyrocketed, creating a ripple effect on the prices of goods and services across the country. In Lagos, bus fares have increased by as much as 40%, making it more expensive for commuters to travel to work. Small-scale traders have reported a decline in sales, as customers grapple with the rising cost of living.
Economic Strain and Inflation
The increase comes as Nigeria is already battling rising inflation, which reached 25.8% in August 2024. Higher fuel costs threaten to push inflation even further, as fuel prices are tightly linked to the cost of goods transport and production. Analysts are forecasting that inflation could hit new heights in the coming months, adding more strain to an economy already struggling with sluggish growth.
“The rise in PMS prices is likely to have a significant inflationary effect,” said Dr Tolu Adekoya, an economist at the University of Ibadan. “We are going to see the cost of food, transport, and essential services rise even more, making life harder for the average Nigerian.”
NNPC’s Move and Private Sector Response
NNPC’s decision to increase the price comes amid a backdrop of foreign exchange volatility and high crude oil prices on the international market. With Nigeria depending heavily on imported refined petroleum products due to limited domestic refining capacity even in the light of Dangote’s Refinery which is yet to function at its full capacity, global oil price fluctuations are swiftly felt in local fuel markets.
Despite NNPC’s official rate of ₦998 per litre, several private filling stations are now selling PMS above ₦1,000. These stations cite supply chain disruptions, forex shortages, and operational costs as reasons for the higher prices.
“NNPC may set a benchmark, but we have our own costs to consider,” said Ibrahim Musa, the manager of a filling station in Abuja. “We are buying fuel at higher prices due to supply issues, so we have no choice but to sell above ₦1,000.”
Government Response and Public Discontent
The Federal Government has remained relatively quiet since the price hike, despite growing unrest among citizens. Protests have erupted in several states, with Nigerians demanding government intervention to cushion the effects of the fuel price increase. The Nigeria Labour Congress (NLC) has threatened a nationwide strike if the situation is not addressed swiftly.
Labour leaders argue that the government has failed to provide the necessary palliatives to mitigate the harsh economic conditions. In June, after the removal of fuel subsidies, the government had promised to roll out measures to ease the burden on Nigerians. However, critics argue that these interventions have been slow and ineffective.
“We are tired of empty promises,” said Mary Okon, a market woman in Port Harcourt. “The cost of everything has gone up food, transport, school fees. How are we supposed to survive?”
Potential Long-Term Effects
Looking ahead, experts warn that prolonged high fuel prices could have severe long-term consequences for the Nigerian economy. Increased costs of production for industries, reduced consumer spending, and a general slowdown in economic activity are all looming threats. There is also growing concern that the informal sector, which comprises a significant portion of Nigeria’s economy, will be disproportionately affected.
“High fuel prices are going to discourage investment, especially in sectors reliant on transportation and energy,” said Dr Adekoya. “We are going to see a tightening of the economy as both businesses and individuals cut back on spending.”
As the country grapples with yet another fuel price hike, the consequences are being felt across all levels of society. The rising cost of living, inflationary pressures, and the government’s apparent inaction are fuelling public discontent. Without swift and decisive intervention, Nigeria could be headed towards deeper economic challenges in the months to come.
