The Nigerian National Petroleum Company (NNPC) Limited alongside private marketers has raised the pump price of Premium Motor Spirit (PMS), commonly known as petrol, to N955 per litre, marking a significant increase that has begun to ripple across Nigeria’s economy, particularly impacting transportation costs nationwide.
This price hike, effective from October 13, 2025, represents approximately a 6.8 percent surge from the previous rate of N890 per litre in Abuja, with Lagos experiencing an even steeper increase to N992 per litre from N865 per litre. The adjustment reverses earlier reductions made in August and reflects ongoing challenges in Nigeria’s fuel supply chain including supply rationing from the Dangote Refinery and increased loading costs from N825 to N845 per litre. According to Chinedu Ukadike, spokesman for the Independent Petroleum Marketers Association of Nigeria (IPMAN), “When people scramble for product, price must go up,” indicating supply constraints and logistics troubles are core reasons behind the surge. Additionally, the National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PPROOAN), Billy Gillis-Harry, confirmed the price rise, highlighting cooperation amongst marketers on the pricing adjustment.
The ramifications of this fuel price hike have been immediate and profound for Nigerians. Transportation fares have surged by as much as 50 percent in major cities, forcing commuters to grapple with higher travel costs or resort to less convenient alternatives like walking long distances. Businesses dependent on transportation are also passing increased costs to consumers, spiking prices for goods and services and adding pressure to the already fragile economic situation marked by high inflation. Experts warn this could deepen the cost-of-living crisis with harsher effects on low-income Nigerians. A study on previous fuel price hikes indicated that such surges severely limit passenger mobility, discourage investment in transport, and may reduce operational routes, thereby increasing overheads for transport companies and potentially limiting public transportation availability.
Complementing the economic challenges fueled by the price hike is the financial sector’s conspicuous development. Deposits by Nigerian banks with the Central Bank of Nigeria (CBN) soared by an astonishing 568.7 percent year-on-year, reaching N146.13 trillion in the first nine months of 2025. This dramatic increase is largely attributed to tightening monetary policies including the Cash Reserve Ratio (CRR) hike by the CBN, aimed at controlling inflationary pressures. According to reports, leading banks like Zenith Bank have recorded significant growth in compulsory reserves with the central bank, underscoring liquidity management shifts in the financial system amid the broader economic turbulence.
The backdrop to these intertwined developments includes Nigeria’s ongoing fuel subsidy removal policy that began in May 2023 under President Bola Tinubu’s administration. This policy aims to deregulate the downstream oil sector, pushing prices closer to market levels while attempting to reduce fiscal burdens. However, it has repeatedly sparked public dissent due to the resulting inflationary impacts and rising living costs. The recent price hike coincides with sharp increases in related energy costs, including cooking gas soaring from N1,000 to N3,000 per kilogram, further straining household budgets.
Eyewitness accounts reveal frustration and confusion among motorists at fuel stations where some outlets have closed or rationed fuel amidst the price increases. Traders and daily commuters are already feeling the pinch with longer waits and higher fares becoming the new norm.
In summary, the hike in fuel prices to N955 per litre by NNPC and partners has set off a chain reaction impacting transportation costs and the broader economy at a critical time. The concurrent rise in banks’ deposits with the CBN reflects tightening liquidity aimed at controlling inflation. Going forward, stakeholders urge the government to implement effective palliative measures to cushion vulnerable populations while exploring alternatives such as compressed natural gas to reduce petrol dependency and stabilize living costs. Policymakers and the public alike face challenging decisions as Nigeria navigates these economic headwinds.
