The ongoing price war in the downstream oil sector intensified on Tuesday as major oil marketers began offering petrol at lower prices than the N825 per litre gantry loading cost set by Dangote Petroleum Refinery. This move follows revelations that the landing cost of imported Premium Motor Spirit (petrol) in Nigeria has dropped to N774.72 per litre. Marketers indicated that this continued decline could lead to pump prices of PMS falling to around N800 per litre. Dealers noted that the N774.72 per litre landing cost, which includes expenses such as shipping, import duties, and exchange rates, represents a significant reduction of N50.28 from the N825 per litre offered at Dangote Petroleum Refinery’s gantry. Consequently, the industry has seen a shift, with retail marketers opting for imported products over refinery products due to lower pricing. This decrease in landing costs is expected to influence consumer petrol prices and may prompt a return to petrol imports by marketers. “Crude oil is a major component in the production of fuel, so a further reduction in its price would definitely warrant a drop in petrol price, and it is possible to drop to N800 per litre,” stated Chief Ukadike Chinedu, National Publicity Secretary of the Independent Marketers Association of Nigeria. Last Monday, the Nigerian National Petroleum Corporation (NNPC) reduced its retail petrol price to N860 and N880 per litre from N945 and N965 in Lagos and Abuja, respectively. This followed Dangote refinery’s reduction of its retail fuel price to N860 and N880 per litre across its retail partners. The refinery also reduced its ex-depot petrol price from N890 to N825 per litre, marking its third price cut in two months. However, NNPC’s price reduction spurred a wave of competitive pricing among private marketers aiming to capture market share in a price-sensitive environment. The reduction resulted in significant losses for petrol importers, averaging N2.5 billion daily and N75 billion monthly. In a bid to survive, marketers have now secured products at cheaper costs, impacting the refinery’s operations. The Major Energies Marketers Association of Nigeria’s latest daily energy data revealed that the on-spot estimated import parity into tanks reduced to N774.82 per litre, a 16.5 percent reduction from the previous N927.48 per litre. This cost reduction provides private depot owners and independent marketers with a profitable alternative. An analysis showed that several private depots, including AA RANO and MENJ, have lowered their loading costs to N830 per litre. In contrast, marketers who purchased from Dangote refinery at N825 are selling at N835 per litre, yielding only a small profit. Oil and gas expert Olatide Jeremiah predicted that the current situation might compel the refinery to lower its ex-gantry price to attract more customers. Jeremiah noted that marketers are increasingly sourcing products from private depots for greater price stability. On Monday, the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN) criticized the constant fuel price reductions, citing ongoing losses for marketers. Despite deregulation, PETROAN called for regulations to mandate that prices can only be changed every six months.
