Nigeria’s current petrol price exceeding N1,300 per liter remains unaffordable for most citizens earning the national minimum wage, according to economist Banji Oyelaran-Oyeyinka, who asserts that affordability must be evaluated through purchasing power parity rather than nominal price tags.
Oyelaran-Oyeyinka, a former special adviser to the president of the African Development Bank on industrialisation, cautioned in a Saturday statement that directly converting Nigeria’s fuel prices to foreign currencies generates an “economic fallacy” and misleads the public. He emphasized that Nigeria’s economic framework—marked by low incomes, elevated inflation, and weak purchasing power—renders petrol costly irrespective of its surface price. Fuel pricing, he noted, cannot be assessed in isolation but must consider broader development equations central to low-income economies where subsistence living limits fuel usage.
Purchasing power parity, he explained, provides a realistic gauge by measuring how long a worker must labor to afford goods, rather than relying on currency conversions. “Low nominal petrol prices in Nigeria do not translate to affordability,” he stated.
His analysis aligns with recent market trends. Media Talk Africa reports show petrol prices surged over 50% in weeks, hitting N1,361 to N1,380 per liter in Abuja, up from N875 to N900. This hike follows successive increases by Dangote Refinery, which adjusted its gantry price to about N1,200 per liter in March. Since launching operations in 2023, Dangote Refinery has significantly influenced Nigeria’s fuel supply dynamics.
With Nigeria’s minimum wage at N70,000 monthly, a liter of petrol consumes nearly 2% of a minimum wage earner’s daily income. This strain persists amid inflation rates exceeding 30%, which have eroded real wages and heightened living costs. The post-2023 removal of fuel subsidies initially drove price increases, embedding fuel costs into ongoing economic challenges.
Oyelaran-Oyeyinka’s perspective underscores that addressing petrol affordability requires systemic solutions focused on income growth and inflation control, beyond price adjustments. As debates on economic reform continue, the emphasis on purchasing power parity highlights the need for policies that enhance household resilience in Africa’s most populous nation.
