Expert Says Petrol Price Hike Will Make Nigerians Poorer, Estimates Losses in Homes
- Economist and CEO of FDC, Bismarck Rewane, said Nigerians will lose about N5 trillion due to the petrol price hike
- He said the government would be the ultimate beneficiary of the petrol hike as the policy would siphon funds from citizens to the government
- Rewane stated that the beginning of petrol production by Dangote Refinery will provide relief for Nigerians but will not crash prices
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Economist and CEO of Financial Derivatives Company Limited (FDC), Bismarck Rewane, has projected that the latest hike in the pump price of petrol by over 50% from N568 to N855 per litre, will siphon N5 trillion from Nigerian consumers to the government and increase poverty.
He also predicted that the new petrol price would increase the number of Nigerians living in poverty to N168 million by 2025 from the current 161 million in 2023.
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Petrol hike to boost FX rate
According to Rewane, the price hike could boost the naira's exchange rate as liquidity decreases but may cause social unrest as citizens react to frustration.
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He made the assertions during his presentation at the Lagos Business School (LBS) Breakfast programme.
The FDC boss said that the commencement of petrol production from the Dangote Refinery would relieve consumers by addressing supply gaps but that the global price of crude oil would dictate the commodity’s price.
He said the hike in petrol prices could lead to re-inflation in September as logistics costs grow and consumer demand declines due to income squeeze.
He said the hike could also hasten energy poverty by 76.3% in 2025 from 71% in 2023.
Increased power supply to attract investors
ThisDay reports that Rewane said the beginning of petrol production by Dangote Refinery will relieve Nigerians by addressing supply challenges and guaranteeing the quantity of refined products but not the price, as the refinery will not sell below production cost.
The economist said the rise in electricity generation to 6,000MW from 4,000MW in the next three months was expected to improve power stability.
He disclosed that the impact of improved power generation and supply on the economy would attract investors and boost foreign direct investment (FDI) inflows, enhance economic stability, and encourage higher industrial output and job creation, leading to GDP growth, as 1,000MW addition will lead to 0.5% GDP growth.
NNPC to be the sole buyer of Dangote petrol
Legit.ng earlier reported that the Nigerian National Petroleum Company Limited (NNPC) had said that the Dangote Refinery and any other local refinery could sell directly to marketers on a willing buyer, willing seller terms.
The national oil firm disclosed that it is a practice for deregulated products and stated that it has no plan to become the sole distributor for any entity in a free market.
Therefore, the notion of a sole off-taker for Dangote Refinery was yet to arise.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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