Petrol Marketers Challenge Dangote Refinery as Fuel Prices Drop below N800 Per Litre
Fuel prices in Nigeria are expected to decline as the cost of importing petrol significantly drops, intensifying competition between Petroleum marketers and Dangote Refinery. The drop is attributed to the global decline in crude oil prices, with Brent crude falling below $70 per barrel.
According to reports, major oil marketers are adjusting their pricing strategies to compete with Dangote Petroleum Refinery’s gantry loading cost of N825 per litre. The landing cost of Premium Motor Spirit (PMS) imported into Nigeria has decreased to N774.72 per litre, prompting expectations that pump prices could fall to around N800 per litre.
Depot prices have already seen adjustments, with AA RANO, MENJ, and MRS TINCAN setting their ex-depot prices at N830 per litre. Other depots, including WOSBAB, AITEO, and RAINOIL, have placed their prices between N831 and N832 per litre. Meanwhile, marketers who procured two million litres from Dangote Refinery at N825 per litre are reselling at N835 per litre, making minimal profit margins.
Price War Between Dangote Refinery and NNPC
Nigeria’s petroleum sector has been experiencing a fierce price war between Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL), leading to reduced petrol prices for consumers. Dangote Refinery initiated the competition by cutting its ex-depot petrol price from N890 to N825 per litre. In response, NNPCL reduced its pump price from N945 to N860 per litre to maintain its market position.
The competition has benefited motorists and businesses, as many consumers prefer to purchase from Dangote Refinery partner stations due to their lower prices. However, concerns have been raised that Dangote’s aggressive pricing could lead to a monopoly, mirroring its dominance in the cement industry.
Experts Weigh in on the Fuel Price Battle
Economic experts have weighed in on the situation, highlighting potential long-term effects of the ongoing price war. Dr. Paul Alaje, Chief Economist and Partner at SBM Professionals, warned that the price reductions might not last, and Nigerians could eventually pay over N1,000 per litre once competitors are driven out of the market.
Bismarck Rewane, Managing Director of Financial Derivatives Company, described the competition as beneficial to consumers in the short term but cautioned that market forces would eventually stabilize prices. He stated:
“In a price war, nobody wins; the consumers win in the short run, and then eventually, the market goes back to where it should be. But, at the end of the day, between now and June, the price leadership will be firmly established.”
Chief Ukadike Chinedu, National Publicity Secretary of the Independent Marketers Association of Nigeria, emphasized that crude oil prices play a crucial role in determining fuel costs, stating:
“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.”
NNPC Joins the Price Reduction Strategy
The NNPC has also responded to the price war by reducing its pump price to N860 per litre. Additionally, Dangote Refinery has announced that three filling stations in Lagos, including MRS, AP, and Heyden, will sell petrol at N860 and N865 per litre.
Commercial drivers and consumers have welcomed the reduction, hoping for further decreases that could ease economic pressures on businesses and households. However, the long-term sustainability of these price cuts remains uncertain, with experts predicting further market shifts in the coming months.
As the competition continues to unfold, consumers can expect more price adjustments as marketers and refiners jostle for market dominance. The coming months will reveal whether Dangote Refinery maintains its pricing advantage or if NNPC and independent marketers regain market control.