Price of diesel in Nigeria increases by 168.26% in one year, catapults inflation to record high

Oredola Adeola

The average retail price of Automotive Gas Oil (AGO) also known as diesel, paid by Nigerian consumers increased by 168.26% on a year-on-year basis from a lower cost of N311.98 per litre recorded in the corresponding month of last year to a higher cost of N836.91 per litre in February 2023.

This was revealed by the National Bureau of Statistics (NBS) in its Automotive Gas Oil (Diesel) price watch for February 2023, and obtained by EnergyDay on Monday.

EnergyDay gathered that the over 168.26% increase of diesel on a year-on-year basis rate for February 2023, was also seen to have impacted the Nigeria’s headline inflation rate which surged to 21.91%, being the highest in seventeen years.

According to the NBS data, on a month-on-month basis, an increase of 0.98% was recorded from N828.82 in the preceding month of January to an average of N836.91 in February 2023.

Looking at the variations in the State prices, the top three States with the highest average price of the product in February 2023 include Bauchi (N904.33), Abuja (N885.00), and Adamawa (N873.33).

Furthermore, the top three lowest prices were recorded in the following States namely, Bayelsa (N767.14), Katsina (N778.75), and Edo (N789.43).

The Zonal representation of the average price of Automotive Gas Oil (Diesel) shows that North Central has the highest price of N850.65 while South-South zone has the lowest price N814.63 when compared with other zones.

The price of Diesel has been surging globally since the ongoing sanctions on Russia, which has since March 2022, taken off more than three million barrels per day volume of Diesel off the markets.

FACTORS FOR THE SURGING PRICE OF DIESEL

Vitol, one of the world’s leading oil traders, last year warned that Europe imported about half of its diesel from Russia and another half of its demand from the Middle East. It added that the shift to more diesel consumption over petrol in Europe had created shortages of fuel.

EnergyDay gathered that while the global shortage of diesel is playing out, Nigeria’s diesel consumers including the manufacturers and transporters have been battling with the monthly hike in diesel, without any measure on the part of the Government to curtail the impact.

Since diesel is a deregulated petroleum product, marketers of the commodity have lamented over their inability to get foreign exchange at the Central Bank of Nigeria, CBN’s official rate.

Many of the importers of diesel in Nigeria depend on the black market to get US Dollars to import diesel and other deregulated petroleum products into the country.

Industry experts have warned that as long as the prices of diesel and other fuels keep rising, the negative consequences would continue to increase the headline index and core inflation.

DOMESTIC REFINING AS SOLUTION TO PRICE OF DIESEL

Experts have recommended the hasty commencement of some of the country’s refineries to drive down the supply-side shock of importing diesel which is a major fuel used to power industrial, commercial, and domestic activities in Nigeria, due to the unreliability of the grid system.

Since Nigeria has been struggling to import enough diesel to drive the economy amidst global supply shortfall and scarcity of forex, industry experts have urged the Nigerian Government to focus more on the hasty completion of the ongoing rehabilitation of the national refineries.

They have also charged the government to offer more incentives to owners of private refineries in order to boost local refining capacity.