The landing cost of imported Premium Motor Spirit (petrol) dropped to N797 per litre on Monday, amid plans by oil marketers to cut the volume of fuel they buy to reduce losses, The PUNCH reports.
The new drop comes amidst a recurring price war in the downstream oil sector. Last week, the development made the Dangote refinery quietly implement a price reduction at its loading gantry, reducing the loading cost of its petrol from N825 per litre to N815 per litre.
This N10 price reduction prompted a competitive reaction from private fuel depots, forcing them to adjust their prices downward to maintain their market position.
Energy experts argue that the continuous decline in PMS prices has been causing significant losses for oil marketers and importers, who lose an average of N2.5bn daily and N75bn monthly.
Amid mounting losses, oil marketers under PETROAN have called for a regulation mandating that fuel prices be adjusted only every six months, but it remains uncertain whether the regulatory body will approve the demand.
Speaking with Sunday PUNCH, the National Vice President of IPMAN, Hammed Fashola, said that while the price war has benefited Nigerians, the unpredictability of fuel price reductions is forcing oil marketers to cut their purchases, leading to significant daily losses.
However, in the latest Competency Centre daily energy data released on Monday, the Major Energies Marketers Association of Nigeria revealed that petrol-importing marketers paid a total sum of N797.66 to bring in a litre of petrol.
Dealers said the N797.66 per litre on-spot estimated import parity into tanks, which factors in various expenses including shipping, import duties, and exchange rates, is a considerable reduction of N20.16 from the N817.82 per litre landing cost last week Friday.
It remains to be seen if the situation will cause a price disruption between the Nigerian National Petroleum Company, the Dangote refinery and private depot owners.
The document showed that on-the-spot sales at the NPSC-NOJ terminal dropped N797.73 per litre from N817.90 per litre charged last week Friday, while the average cost for 30 days also dropped to N851.76 from N854.15 per litre.
The document also noted that the price of Brent crude was benchmarked at $70.58 per barrel, from $69.88 per barrel quoted on Friday, with an exchange rate of N1,517.93 per dollar. This price was calculated based on 38,000 metric tonnes by the marketers.
It noted, “International Petroleum Product Pricing is currently experiencing significant volatility due to geopolitical and economic factors, including events in the Middle East, China’s market dynamics, seasonal variations, production status, and other global influences.
“The foreign exchange rate remains fairly stable, with minimal fluctuations observed over recent periods. Landing cost, being fundamentally influenced by these elements, is likely to change several times intra-day.
“Savings can be achieved through negotiations, access to foreign exchange, and logistics efficiencies, e.g., eliminating STS where possible or receiving larger cargos.”
Meanwhile, the Dangote refinery has reduced the ex-gantry price of Diesel to N870 per litre from N1,020 per litre, indicating a price reduction of N150.