News in brief:
– The Dangote Refinery will sell fuel at slightly higher prices in Northern Nigeria compared to Southern states.
– This price difference is likely due to distance and could lead to increased food prices in Nigeria’s major agricultural regions, further straining the economy.
In a statement released on Monday, September 16, 2024, the Nigerian National Petroleum Company Limited (NNPCL) unveiled the estimated pump prices for Premium Motor Spirit (PMS), commonly known as fuel, from the Dangote Refinery.
According to the company’s announcement, states in Northern Nigeria are expected to pay approximately 3.98% more for fuel than their Southern counterparts. While the exact reasons for this price differential was not mentioned, the distance between the refinery’s location in Lagos and Northern states like Borno and Sokoto is likely a contributing factor.
The implications of this price disparity extend beyond fuel costs. As the North is a major agricultural hub, the increased transportation costs associated with higher fuel prices is expected to cause further increases in food prices. This is particularly concerning given that food prices in Nigeria have been on the rise in recent months.
According to data gathered by this publication, the price of moving a 30-ton truck from Kaduna to Ibadan in November 2023 was over ₦1.3 million from less than ₦900,000 in May before the fuel subsidy removal and over 129% spike in its price.
One of the reasons for this attendant problem is the higher cost of agricultural inputs, such as fertilisers and pesticides, which may increase due to the reliance of their production and transportation on fuel. This will put further strain on farmers and ultimately contribute to higher food prices.
The correlation between fuel prices and food prices in Nigeria is well-established. Fuel is a critical component in the transportation of food items from farms to markets and processing plants. When fuel prices rise, transportation costs increase, which are often passed on to consumers in the form of higher food prices.
Overall, the announcement of higher fuel prices from the Dangote Refinery is a cause for concern, as it is likely to exacerbate existing inflationary pressures and further impact the cost of living for Nigerians.
