Recent data from the Major Energies Marketers Association of Nigeria (MEMAN) shows that the landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has decreased to N981 per litre, marking a significant drop from around N1,130 in previous weeks.
This reduction of over N140, as of September 25, 2024, is attributed to falling global crude oil prices.
The cost of refined petroleum products, including petrol, diesel, and aviation fuel, is heavily influenced by crude oil prices and foreign exchange rates.
Brent crude, the global benchmark, traded at an average of over $80 per barrel in August 2024 but has since fluctuated between $70 and $75 per barrel. By Thursday, Brent was priced at $71.41 per barrel, down from $73.46 the previous day, according to data from the petroleum ministry.
This drop in crude prices is partly due to decreased oil demand in China and increased production announcements by the Organisation of Petroleum Exporting Countries (OPEC). Statistica, a global statistics firm, reported an average Brent crude price of $80.36 per barrel in August 2024, reflecting a downward trend.
As petrol landing costs decrease, major oil marketers in Nigeria have resumed importing the product. Previously, the Nigerian National Petroleum Company Limited (NNPC) was the sole importer.
However, with the full deregulation of the downstream oil sector and rising pump prices, the Dangote Petroleum Refinery has also started producing and releasing locally refined petrol.
Reports indicate that major oil marketers received shipments of approximately 141 million litres of imported PMS in mid-September, marking a shift in supply dynamics.
Despite the drop in landing costs, petrol prices at the ex-depot level vary widely across Nigeria. In Lagos, prices range from N865 to N1,200 per litre, while in Calabar and Port Harcourt, they range from N980 to N1,400. The landing cost for diesel is N1,089 per litre, with an ex-depot price of N1,165 in Lagos and N1,200 in Calabar and Port Harcourt. Aviation fuel now stands at N1,117.34 per litre.
A notable price difference has emerged between imported petrol and fuel from the Dangote Refinery. According to the NNPC, Dangote-sourced fuel is priced at N898 per litre, but Dangote officials have denied selling their fuel at this rate, leaving some ambiguity around the actual price.
When Dangote launched its locally produced fuel, NNPC raised petrol prices from around N600 to between N855 and N900 per litre.
The NNPC later indicated that Dangote-sourced fuel could exceed N1,000 per litre in northern regions, with prices reaching N1,019 in states like Borno, and N999.22 in Abuja, Sokoto, and Kano. In southern states, like Oyo and Rivers, prices hover around N960 per litre, with Lagos recording the lowest prices at N950.
While petrol prices have risen to over N1,200 in some areas, certain major marketers in Lagos are still selling at N910 per litre.
According to Dapo Segun, the Executive Vice President, Downstream at NNPC, the pricing of Dangote-refined fuel is market-driven, despite reaching an agreement with Dangote management.
“Dangote said to us, ‘This is how much I want for it (PMS)’. And we say, ‘Hey, Dangote, if we go out there, we can get it for this much, so we won’t pay you this much for it.’ We went into negotiation, which took over a week to finalize. They (Dangote officials) will come with their position, we’ll come with a counter; they’ll revise, and we’ll counter again,” Segun said, emphasizing a point made by Soneye that the NNPC would lift Dangote PMS only if it was cheaper than imports.
As sales of PMS to the NNPC continue at the Dangote refinery, there is hope among Nigerians that prices will decrease further when the naira crude sale commences on October 1, 2024.
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