Oil report

UPDATE 1-Nigeria's gasoline price to hit record in naira terms in Sept -PPMC circular

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LAGOS/ABUJA, Sept 2 (Reuters) - Nigeria’s gasoline price will hit its highest ever in naira terms this month, according to a notice from a state oil subsidiary seen by Reuters.

The Pipelines and Product Marketing Company set the ex-depot gasoline price at 151.56 naira ($0.3981) a litre, above the previous pump price record of 145 naira a litre.

The new pump price will be even higher to incorporate transportation and logistics costs. Oil industry sources said pump prices are likely to hit at least 160 naira per litre.

Cheap fuel prices are seen by many in Africa’s largest oil exporter as a birthright, and the government has always capped and subsidized fuel prices at enormous expense.

An effort by previous President Goodluck Jonathan to eliminate subsidies was scuppered after riots ensued.

But with revenues battered by the coronavirus crisis, President Muhammadu Buhari’s government in March announced a new pricing mechanism that maintained government control, but reflected the market and would eliminate subsidies.

At the time, pump prices fell amid tumbling oil futures, but international oil and gasoline prices have since rebounded.

Tunji Oyebanji, chairman of the Major Oil Marketers Association of Nigeria, said he welcomed the new pricing structure.

“We believe it will prevent the return of subsidies while allowing operators the opportunity to recover their costs,” he said in an email. “This will in the long run encourage investment and create jobs.”

Nigerians are grappling with rising inflation and unemployment, but experts have long criticized fuel subsidies as a costly drain on government resources that disproportionately benefitted the wealthy.

Eliminating subsidies is also a core point of contention in talks with the World Bank for a $1.5 billion loan. ($1 = 380.7000 naira) (Reporting By Libby George and Camillus Eboh; editing by David Evans and Alexandra Hudson)