Fuel marketers are considering moving away from Dangote fuel due to a significant drop in the cost of imported petrol, which has become cheaper than the price set by the Dangote Petroleum Refinery.
As of Friday, the landing cost of Premium Motor Spirit (PMS) was reported to be N922.65 per litre, a decrease of N32.35 from the N955 per litre at Dangote’s loading gantry. This reduction, which factors in shipping, import duties, and exchange rates, could potentially shift the market dynamics, encouraging marketers to import petrol rather than rely on Dangote’s offerings.
This price drop provides an opportunity for importers to capitalize on cheaper products, and many dealers are expected to pursue imports given the cost advantage. A major marketer, speaking confidentially, explained that the lower cost of imported petrol is an attractive incentive. Last Sunday, Dangote Petroleum Refinery explained that the recent price rise from N899.50 was due to increasing crude oil costs, a major component for refined petroleum products. However, the landing cost reduction signals a potential reprieve from the volatility in global oil prices.
Despite this price decline, retail petrol prices in Nigeria have remained high, with major marketers selling petrol for between N990 and N1,010 per litre in the Federal Capital Territory. According to the latest data from the Major Energies Marketers Association of Nigeria, the cost of petrol at the point of import has decreased by 2.2% to N922.65 per litre from N943.75 per litre earlier in the week. The price of Brent crude was also noted to have dropped, further benefiting the importers.
This shift has given independent marketers and private depot owners a chance to generate profits by sourcing cheaper petrol, with the ex-depot price now between N950 and N990 per litre. While this is seen as a favorable development for stakeholders in the downstream oil and gas sector, the price fluctuations remain heavily influenced by exchange rates and freight costs.
In an unexpected twist, oil marketers have imported a total of 76.84 million litres of petrol within just two days, as revealed by data from the Nigerian Port Authority. This was facilitated by two vessels that arrived at the Apapa and Tincan ports in Lagos, with another two vessels berthing at the Dangote terminal at Lekki Deep Seaport. The National President of the Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, expressed surprise at these imports, suggesting that stakeholders had agreed to refrain from importing refined products while the Dangote refinery ramped up its production capacity.
He told Punch;
“Well, is there anybody that has landed imported fuel? I am surprised to hear that. I am very surprised to hear that because NMDPRA is the leader of the non-import agreement. The idea was to give the Dangote refinery 180 days to prove its production capacity.
“So I would be surprised if anybody is importing fuel now. Besides now, we have an industry stakeholder forum that was Inaugurated last week, which will direct happenings in the industry. There was an industry agreement that there should be no import, and Dangote was given a certain number of days to produce a certain quantity daily for us.”
It was also reported that Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, clarified that the non-import agreement was not binding, but rather a mutual understanding, as Dangote’s products had been cheaper than imported ones at the time. With the current price shifts, marketers are now exploring alternatives that offer a better margin, further complicating the dynamics in the Nigerian fuel sector.
He said;
“There was no agreement like that, but it was a mutual understanding not to import. It was because, at the time, Dangote products were cheaper than imported ones.
“NMDPRA is supposed to give (licence to) anyone who can import at a cheaper rate. We all are looking at cheaper rates, and that is what is happening.”
