Current Price of Fuel in Nigeria, Kenya and South Africa

Price of Fuel in Nigeria– For the foreseeable future, the world will continue to rely on petroleum products, as they have been doing for decades. These petroleum products, such as fuel, gasoline, and diesel, are essential in many countries for powering cars, generators, large industrial machines, and vehicles. Therefore, we can conclude that they are vital components of our lives.

In this post, we will compare fuel prices in Nigeria, Kenya, and South Africa to determine which is cheaper or more expensive. We will take into account whether the country is an oil-producing nation or not.

Note: Prices of fuel across Africa are given in the link. However, this price has been updated since it was published, so this should be taken as a guide to an approximate figure.

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Introduction

Recently, the Nigerian National Petroleum Company Limited (NNPCL) announced a reduction in the depot price of Premium Motor Spirit (PMS), commonly known as petrol, from N640 per litre to an average of N630 per litre.

Following this recent announcement, we will compare fuel prices in Nigeria, South Africa, and Kenya. Additionally, we will analyze the minimum wage structure in each of these countries to assess whether the price of petrol is relatively high or not.

Price of Fuel in Nigeria

According to the regulator of petrol prices in Nigeria, the Nigerian National Petroleum Company Limited (NNPCL), the official pump price of petrol (PMS) is $1.22 per liter. This price adjustment occurred after the federal government removed the subsidy on petrol, leading to a significant increase from $0.38 per liter.

However, due to logistical and regional factors, the actual price of petrol may vary across the country. Presently, petrol prices range from $1.17 to $1.32 per liter, with an average price of $1.25 per liter nationwide.

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Price of Fuel in Kenya

The price of a liter of super petrol in the Kenyan capital, Nairobi has dropped below the $2 mark for the first time since August last year. This drop comes as pump prices decrease by up to $0.07 per liter, marking the most significant month-on-month decrease.

Super petrol will now retail at $1.99 after a decrease of $0.07, while diesel will sell at $1.90 per liter, a reduction of $0.05. Kerosene, with the smallest drop, will retail at $1.88 per liter, down by $0.04 in the city.

These price cuts, effective until April 14, according to the latest pricing schedule, aim to further curb the cost of living.

The last notable drop in pump prices occurred in May 2020, when super petrol decreased from $0.92 to $0.83 per liter, and diesel dropped from $0.97 to $0.78 per liter.

This decrease reflects the global trend of falling refined fuel prices due to reduced demand in major economies. The price of a barrel of murban crude, which influences these new prices, decreased from $83.32 to $77.68 compared to last month.

These recent price drops are expected to contribute to lowering inflation, which decreased from 6.9 percent in January to 6.3 percent last month.

The strengthening of the shilling against the dollar and the global decline in refined fuel prices have resulted in the most significant month-on-month price cuts for Kenyans in over three years.

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Price of Fuel in South Africa

The Department of Mineral Resources and Energy (DMRE) has announced an increase of at least $0.07 in all grades of fuel starting today.

This includes a $0.07 increase for both 93 ULP & LRP petrol, and 95 ULP & LRP petrol, a $0.06 increase for diesel with 0.05% sulphur, and a $0.07 increase for diesel with 0.005% sulphur. Illuminating paraffin will see a wholesale increase of $0.04, and the Single Maximum National Retail Price for illuminating paraffin will rise by $0.06.

Additionally, the Maximum LP Gas retail price will increase by $0.03. These adjustments result in 95 liters of petrol, previously priced at $1.57 per liter in Gauteng, now costing $1.66 per liter. The DMRE attributed these increases to several factors, including the average Brent crude oil price rising from $82.03 to $82.50 per barrel, international product prices of petrol, diesel, and illuminating paraffin increasing, and the Rand depreciating slightly against the US dollar from $18.77 to $19.20 per USD during the review period.

The DMRE Minister, Gwede Mantashe, along with the Minister of Finance, Enoch Godongwana, approved an increase from $0.001 to $0.006 in the IP Tracer Dye Levy applicable to Diesel, effective from March 6, 2024, until March 5, 2025. This monthly adjustment of fuel prices in South Africa reflects international and local factors, as the country imports crude oil and finished products at globally set prices, including importation costs.

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Comparing Wages in each Country based on Fuel Prices

Reviewing the fluctuating fuel prices across various countries, let’s analyze the minimum wage structures to determine which country’s fuel prices are relatively higher.

In Nigeria, the minimum wage remained unchanged at $66.23 per month in 2023, maintaining an average of $62.60 per month from 2018 to 2023. The highest recorded minimum wage in Nigeria was $66.23 per month in 2019, while the lowest was $40.28 per month in 2018.

Kenya’s minimum wage also remained stable at $136.36 per month in 2023, with an average of $70.69 per month from 1994 to 2023. The highest minimum wage in Kenya was $152.44 per month in 2022, and the lowest was $15.82 per month in 1994.

South Africa recently gazetted a new National Minimum Wage (NMW) of $1.84 per hour on February 3, 2024, effective March 1, 2024. Domestic workers are entitled to this minimum wage as well. This adjustment aligns with the Basic Conditions of Employment Act, allowing for an annual review of the minimum wage.

Affordability of Fuel in each of these Countries based on Minimum Wages

Based on the comparison of minimum wages and fuel prices in the given information:

1. Nigeria:

• Minimum Wage: $66.23 per month
• Fuel Price (approximate): $1.22 per liter

1. Kenya:

• Minimum Wage: $136.36 per month
• Fuel Price (approximate): $1.25 per liter

1. South Africa (assuming monthly wage based on hourly rate):

• Minimum Wage: $1.84 per hour (approximately $329.60 per month based on 8 hours per day, 22 days per month)
• Fuel Price (approximate): $1.66

From the information provided, Nigeria appears to have the most challenging situation regarding fuel affordability for the majority of its population. The minimum wage in Nigeria is significantly lower than that in Kenya, yet the fuel price is comparable. This indicates that fuel is relatively more expensive for Nigerians compared to Kenyans based on their income levels. Also, fuel in South Africa is the most affordable.

FAQ: Understanding Fuel Prices and Economic Impact

1. What factors influence fluctuations in fuel prices?

• Fuel prices are influenced by various factors, such as international crude oil prices, currency exchange rates, government policies, including subsidies or taxes, global demand and supply dynamics, and geopolitical events affecting oil production and distribution.

1. How do fuel price changes impact the economy?

• Fuel price changes can have widespread effects on the economy. Higher fuel prices can lead to increased transportation costs, affect the prices of goods and services, and contribute to inflation. They can also impact household budgets, especially for low-income households, and influence consumer spending patterns.

1. What role does minimum wage play in fuel affordability?

• The minimum wage is a critical factor in determining the affordability of fuel for the majority of the population. Countries with lower minimum wages relative to fuel prices may face challenges in ensuring fuel affordability for their citizens.

1. How are minimum wages determined and adjusted?

• Minimum wages are often determined through legislative processes involving government bodies, labor unions, employers, and economic considerations. Adjustments to minimum wages may occur periodically to align with inflation, the cost of living, and economic conditions.

1. What are the implications of fuel affordability for social and economic development?

• Fuel affordability can impact various aspects of social and economic development, including access to transportation, the cost of living, income inequality, and overall economic productivity. Ensuring reasonable fuel prices relative to income levels is essential for sustainable development and social welfare.

1. How do governments manage fuel price fluctuations to mitigate economic impacts?

• Governments employ various strategies to manage fuel price fluctuations, including implementing subsidies or price controls, diversifying energy sources, promoting energy efficiency, investing in renewable energy alternatives, and engaging in international energy market negotiations.

Conclusion

In conclusion, fuel prices are a complex interplay of global economic factors, including international crude oil prices, currency exchange rates, and government policies.

These prices have significant implications for individuals and economies, impacting transportation costs, inflation rates, household budgets, and overall economic development.

Understanding the relationship between fuel prices, minimum wages, and economic stability is crucial for policymakers and citizens alike. Effective management of fuel price fluctuations, along with measures to enhance energy efficiency and promote alternative energy sources, plays a vital role in achieving sustainable and inclusive economic growth.