Fuel in Nigeria remains costly despite nominal pricing, economist cautions

PROFESSOR Banji Oyelaran-Oyeyinka, an economist and former Special Adviser on Industrialisation to the African Development Bank president, has explained why petrol priced around N1,300 per litre is still beyond the reach of many Nigerians, particularly those earning the N70,000 minimum wage.

In a statement issued on Saturday, Oyelaran-Oyeyinka criticised the practice of comparing local fuel prices by simply converting the naira into foreign currencies, warning that such analysis creates a distorted picture of reality.

He argued that direct naira-to-dollar or pound conversions amount to an economic misconception that ultimately misleads the public about the true cost of petrol in Nigeria.

According to him, the structure of Nigeria’s economy, characterised by low wages, high inflation, and weak purchasing power, means that fuel remains expensive for the average citizen regardless of its headline price.

The economist stressed that petrol pricing should not be assessed in isolation, noting that affordability is closely tied to income levels and the overall economic environment.

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He added that the N1,300 per litre price should be seen as just one factor within a broader and more complex economic framework, especially in low-income economies where many people operate at subsistence levels and fuel consumption can become a luxury.

Oyelaran-Oyeyinka further pointed out that purchasing power parity offers a more accurate measure of affordability than exchange rate comparisons, as it reflects how much work is required for individuals to earn enough to pay for fuel.

He maintained that even when petrol prices appear low in nominal terms, they do not necessarily translate into real affordability for Nigerians.

Meanwhile, petrol prices have surged by over 70 percent in recent weeks, rising to between N1,400 from less than N8o0 per litre pre-US-Iran war in Abuja.

The increase follows a series of upward price adjustments by Dangote Refinery, which pushed its gantry price to about N1,200 per litre in March.