Marketers Project N800/Litre As Imported Petrol’s Cost Drops

Oil Marketers Lower Prices Amid Falling Landing Costs

The ongoing price war in Nigeria’s downstream oil sector intensified on Tuesday as major oil marketers reduced their prices to counter the N825 per litre gantry loading cost set by the Dangote Petroleum Refinery. This aggressive pricing strategy followed the continued decline in the landing cost of Premium Motor Spirit (PMS), which recently dropped to N774.72 per litre.

According to industry insiders, the reduction in landing cost, which includes expenses such as shipping, import duties, and exchange rate fluctuations, may push the pump price of petrol to around N800 per litre in the coming weeks.

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Marketers Shift to Cheaper Imported Petrol

The N50.28 per litre difference between the new landing cost and Dangote’s loading price has led to a major shift in strategy among retail marketers, who are now opting for imported petrol over refinery-produced fuel.

Industry findings revealed that several private depots have already adjusted their prices to remain competitive. Some of the latest price changes include:

• AA RANO Depot: N830 per litre
• MENJ Depot: N830 per litre
• MRS TINCAN: N830 per litre
• WOSBAB Depot: N832 per litre
• AITEO Depot: N832 per litre
• RAINOIL Depot: N831 per litre

By contrast, marketers purchasing directly from the Dangote Refinery at N825 per litre are reselling at N835 per litre, making only a N1 profit per litre. This makes refinery products less attractive compared to cheaper imported alternatives.

NNPC and Dangote Fuel Price Reductions Fuel Market Competition

This development comes shortly after the Nigerian National Petroleum Corporation (NNPC) reduced its retail petrol price to N860 and N880 per litre, down from N945 and N965 per litre in Lagos and Abuja, respectively.

NNPC’s decision followed Dangote Refinery’s price reduction, which saw its ex-depot price drop from N890 to N825 per litre. This series of reductions, however, has intensified market competition, with private depot owners undercutting refinery prices to capture a larger share of the market.

Refinery Faces Pressure to Reduce Prices Further

Oil and gas analyst Olatide Jeremiah, CEO of petroleumprice.ng, predicted that the Dangote Refinery might be forced to lower its ex-gantry price to remain competitive.

“Prices, especially for petrol and diesel, began dropping significantly last week. On Thursday, petrol prices fell below Dangote’s ex-depot price of N825 per litre,” Jeremiah stated. “Marketers purchasing from private depots are now able to secure products at N830 to N831 per litre, making it a more viable option compared to the refinery.”

He further explained that marketers who previously purchased fuel from Dangote at a higher price are now struggling to sell their stock at zero profit. This has led many to shift their business to private depots, where prices remain more stable.

Calls for Price Stability Amid Market Losses

Meanwhile, the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN) has raised concerns over the constant fluctuations in fuel prices, warning that retailers are still counting losses despite recent price drops.

In a statement by PETROAN’s Publicity Secretary, Joseph Obele, the association suggested that fuel price changes should be regulated and limited to every six months. This, they argue, would prevent sudden market disruptions and stabilize business operations.

Despite the country’s fuel deregulation policy, PETROAN also advocated for a return to fuel imports, arguing that monopoly should be discouraged to ensure fair competition in the industry.

What’s Next for Nigeria’s Fuel Market?

With private depots offering competitive rates and marketers abandoning Dangote Refinery products in favor of cheaper imports, the refinery may need to further adjust its prices to stay competitive.

For consumers, these developments could result in lower petrol pump prices, offering some relief amid Nigeria’s economic challenges. However, the long-term impact on local refining operations and fuel import dependency remains to be seen.