The Nigerian petroleum market is experiencing a dynamic shift as the landing cost of imported Premium Motor Spirit (PMS), also known as petrol, has fallen below the price offered by the Dangote Petroleum Refinery. Oil marketers report that the landing cost, inclusive of shipping, import duties, and prevailing exchange rates, has dipped to N922.65 per litre. This represents a significant N32.35 reduction compared to the N955 per litre charged at the Dangote refinery’s loading gantry. This price differential is incentivizing marketers to reconsider petrol imports, potentially disrupting the nascent dominance of the Dangote refinery in the domestic market. This development comes despite Dangote’s earlier justification of a price hike from N899.50 per litre, citing escalating crude oil costs.
The decreased landing cost offers a glimmer of hope for consumers burdened by persistently high petrol prices. Despite the drop in import costs, retail prices at major filling stations in the Federal Capital Territory remain stubbornly high, hovering between N990 and N1,010 per litre. Data from the Major Energies Marketers Association of Nigeria (MOMAN) confirms the downward trend in import costs, with the on-spot estimated import parity into tanks pegged at N922.65 per litre on Friday, a 2.2% decrease from the previous day. While the 30-day average cost has seen an uptick, the current landing cost offers a significantly more competitive price point for importers. This improved cost structure potentially opens a pathway to profitability for private depot owners and independent marketers, allowing them to source and distribute petrol at lower rates.
The lower import cost offers significant advantages for stakeholders across the downstream oil and gas sector. Importers now have the opportunity to procure petrol at prices substantially below recent historical averages, ensuring healthier profit margins. With ex-depot prices ranging between N950 and N990 per litre, the reduced landing cost allows for a viable profit margin. This price advantage underscores the potential for increased competition and market stabilization. However, the market remains sensitive to fluctuations in exchange rates and freight costs, which continue to exert influence on Nigeria’s energy landscape. While the reduced import cost is a positive development, the ultimate impact on retail prices remains to be seen.
Further analysis of petrol pricing at various loading depots reveals a general downward trend. Several major players, including Nipco, Aiteo, Sahara, Swift, Wosbab, and AA Rano, have reduced their loading costs, offering petrol at prices between N960 and N970 per litre. Similarly, depots in Port Harcourt, Delta, and Calabar have also adjusted their prices downwards, indicating a broader market response to the lower landing cost. The price adjustments at loading depots, although modest, signal a potential shift towards more competitive pricing in the downstream sector. This could eventually translate to lower retail prices, providing much-needed relief for consumers. However, the extent of this price reduction and its timeline remain uncertain.
Adding another layer of complexity to the situation, data from the Nigerian Port Authority (NPA) reveals that marketers imported a substantial 76.84 million litres of petrol within a two-day period. This influx of imported fuel, despite the purported agreement to prioritize local production from the Dangote refinery, raises questions about the cohesion and enforcement of industry strategies. The NPA data highlights the arrival of two vessels carrying a combined 57,301 metric tonnes of petrol at the Apapa and Tincan ports in Lagos. Two additional vessels, with undocumented capacities, berthed at the Dangote terminal at the Lekki Deep Seaport. This significant import volume suggests that some marketers are capitalizing on the favorable landing cost, potentially undermining the intended focus on domestic refining.
Conflicting perspectives emerge from industry representatives regarding the importation of refined petroleum products. Billy Gillis-Harry, National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), maintains that stakeholders had agreed to suspend petrol imports for 180 days to assess the Dangote refinery’s production capacity. He expressed surprise at the reported imports, emphasizing the role of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in enforcing this agreement. Conversely, Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), clarifies that the import suspension was a “mutual understanding” rather than a binding agreement. He highlights the market’s responsiveness to price fluctuations, suggesting that the current lower landing cost justifies the importation of petrol. This divergence in interpretation underscores the complex interplay of market forces, regulatory oversight, and stakeholder interests within the Nigerian petroleum sector.
