Nigerias on-demand services companies, including ride-hailing, last-mile delivery, and food delivery services, are straining under the weight of a crippling fuel price hike. The rise in fuel costs, triggered by the Nigerian National Petroleum Company's NNPC decision to increase the price of Premium Motor Spirit PMS by 40, has sent shockwaves across the economy.
The pump price has surged to between NGN 855.00 and NGN 897.00 per litre at NNPC stations and well over NGN 1 K in most other outlets, significantly driving up operational costs for businesses dependent on road transport. Broadly, the retail price of petrol has surged more than five-fold in Nigeria since May 2023 when President Bola Tinubu took office and pronounced controversial reforms that have spiked energy costs in general and triggered biting hardship.
The fallout is now apparent across the economy, not least in the on-demand service industry, where maintaining competitive pricing while managing escalating fuel costs has become a delicate balancing act.
Ride-hailing Apps Struggle to CopeAmong the hardest hit are drivers for ride-hailing apps like Uber, Bolt, and InDrive, battling shrinking margins due to rising fuel costs. For many, the algorithms determining ride fares are simply no longer viable.
"It got to a stage when any ride that comes in for 1,500 naira or 2,000 naira, I don't attend to them because I know what I go through to get fuel," a driver told TechCabal . Drivers are increasingly opting for longer trips and requesting that customers pay more than the app-suggested fares, or face ride cancellations. One driver mentioned that customers must now pay up to NGN 5 K for trips that previously cost NGN 3 K.
