The effects of the Coronavirus Disease (COVID-19) appears to be hitting hard on both national and global economies with travel restrictions, ban on public gatherings and trade at a low, in and between states across the world.
One of the worse hit areas is crude oil price as the outbreak of the deadly coronavirus and its spread across the world has forced the international oil market to a near standstill, leaving crude oil price to crash from around $60 per barrel to about $29. The fall has also contributed significantly to lowering the expected open market price of imported petrol below the official pump price of N145 per litre.
In line with the new realities, the Minister of State for Petroleum Resources, Timipre Sylva on Wednesday announced an adjustment in the official price of Premium Motor Spirit, popularly known as petrol, from to N145 per litre to N125 per Litre, adding that a price modulation mechanism is being introduced, to be managed by the Petroleum Products Pricing Regulatory Agency (PPPRA), in order to henceforth adjust the price in line with the market price of crude oil.
According to the Minister, the President also directed officials of the Nigerian National Petroleum Corporation (NNPC) to work out an appropriate price in line with market realities for AGO (diesel) and kerosene.
Most private fuel marketers are however yet to reduce the pump price of petrol, while retail stations belonging to the Nigerian National Petroleum Corporation have started selling at N125 per litre. In a report by The PUNCH, an official of one of the fuel marketers associations claim that marketers are holding their strategy session and would continue to sell the product at the old rate pending when the issues on the payment of price difference between the old and new price on ‘their’ old stock would be resolved.
With these recent developments, there have also been calls on the Federal Government to take advantage of the current situation to liberalise or restructure the market to readjust itself in proportion to relate changes in crude oil prices and exchange rates, as it presents a good opportunity for fuel subsidy to be completely taken out.
There are grave concerns that the growing supply glut in oil markets could end up filling all storage tanks worldwide, potentially causing prices to drop even further to as low as $10 per barrel. For a country like ours that relies on revenue from oil up to 75%, How we go do?
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Temidayo Taiwo-Sidiq is a Journalist, Political Analyst and Satirist with major interest in Nigerian Politics, Governance and Sports.