The cost of importing Premium Motor Spirit (PMS), commonly known as petrol, has surged to an average of N870 per litre, reports from the Major Energies Marketers Association of Nigeria (MEMAN) revealed. This new development has resulted in the landing cost of petrol exceeding the price offered by the Dangote Petroleum Refinery, which has been a key player in the Nigerian fuel market. MEMAN’s data shows that on April 28, the landing cost of petrol was N872 per litre and slightly decreased to N868 per litre by April 29, a sharp rise from the previous rate of N859 on April 23.
This increase in importation costs has put pressure on fuel marketers and importers, as the landing cost has now surpassed Dangote’s ex-depot price of N835 per litre. With the prices climbing steadily, it seems that these marketers are now struggling to maintain profit margins while keeping fuel accessible to consumers.
The difference in pricing among various fuel marketers is striking. While Dangote and some other firms, such as Matrix in Lagos and Rainoil, are selling petrol at around N840 per litre, others like Pinnacle, Mao, Sahara, and AA Rano are offering petrol at rates as high as N889. Notably, regional variations in price are evident, with some areas, particularly in the South-South, paying significantly higher rates due to logistical factors, while Lagos depots have comparatively lower prices.
A source within the industry stated that the persistent fluctuations in fuel prices are impacting businesses negatively. Billy Gillis-Harry, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), expressed concern over the arbitrary price changes. He stated that the continuous price volatility and its poor management by market forces have contributed to the slowing down of business. Despite these challenges, Gillis-Harry emphasized the commitment of PETROAN members to continue providing energy access to Nigerians, even as the sector faces these difficulties.
“We must carry on with our business as best as we can and ensure that Nigeria’s economy remains functional. That’s our commitment to the country,” he added.
The price hikes have also seen adjustments at specific fuel stations across the country. For example, the SGR filling stations along the Sagamu and Mowe areas in Ogun State have reduced their prices to N855 per litre, significantly lower than Dangote’s price and many of its competitors. In contrast, other stations, including MRS and Heyden, are charging as much as N890 per litre.
Fuel prices at the Dangote refinery have been volatile as well. The refinery initially lowered its petrol prices in response to the naira-for-crude deal introduced by the federal government, which was temporarily suspended in March. However, following the government’s directive to continue the deal indefinitely, Dangote reduced its prices again to below N900 per litre, creating a scenario where importers were forced to raise their own prices.
Interestingly, a recent report from S&P Global highlighted the impact of Dangote’s pricing strategy. Despite a significant global drop in crude oil prices, Dangote’s decision to keep its gantry prices relatively high has incentivized fuel imports, resulting in greater volumes of fuel being shipped to West Africa. According to S&P Global, while global prices for refined products like Eurobob M1 fell by nearly 18%, Dangote’s truck prices only saw a marginal reduction, which in turn made imports from international traders more appealing to Nigerian marketers.
These dynamics are exacerbating the challenges faced by local fuel importers. They are now competing with Dangote’s low prices, which have been cited as a major factor in pushing the local refining market into a corner. The rise in petrol landing costs also highlights the broader issue of inefficiencies within Nigeria’s fuel supply chain and refining infrastructure. Despite attempts to resolve these challenges through domestic production and distribution improvements, the sector remains heavily reliant on imports, making it vulnerable to global price fluctuations and local market instability.
As the fuel pricing crisis unfolds, many Nigerians are left to grapple with the higher costs of fuel, a critical commodity that affects nearly every aspect of daily life, from transportation to the cost of goods and services. While government efforts to stabilize the sector continue, the future of the Nigerian fuel market remains uncertain, with many stakeholders urging for long-term solutions that address the systemic issues plaguing the industry.
In conclusion, the rise in petrol landing costs, now exceeding Dangote’s prices, has created a difficult situation for Nigerian fuel marketers. While Dangote’s lower prices present an attractive alternative, they are unsustainable for many importers who are forced to sell below cost in order to stay competitive. The government and industry players alike must work together to stabilize the fuel market and ensure that the needs of both businesses and consumers are met effectively.