The recent fluctuation in the landing cost of petrol in Nigeria has attracted significant attention, particularly with the price dropping from N981 per liter on September 25, 2024, to N945.63 per liter by September 27, 2024. This decrease is attributed to the strengthening of the naira against the US dollar, where the exchange rate moved from N1,667.22 to N1,586.26 within those two days, according to the Major Energies Marketers Association of Nigeria (MEMAN). The appreciation of the naira has been a crucial factor in influencing the landing costs of imported petrol, facilitating a slight easing of fuel prices for consumers.
In addition to currency fluctuations, the global crude oil prices have also experienced a decline, impacting the local petrol prices. Brent crude, an international benchmark, fell from $73.67 per barrel to $72.45, reflecting the interconnectedness of global oil prices with local market conditions. The drop in crude prices, coupled with modest reductions in the average ex-depot prices of Premium Motor Spirit (PMS) in major cities like Lagos, Calabar, and Port Harcourt, suggests a potential easing of fuel costs. However, the reduction was not uniform across the board, as the cost of diesel and aviation fuel also went down slightly, indicating a broader trend in declining fuel costs.
Despite the positive shift in prices for imported petrol, the local landscape remains complex. The Nigerian National Petroleum Company (NNPC) has set different pricing tiers depending on regional markets, pricing petrol at N1,019/liter in the northern states—particularly high-cost areas like Borno—while offering it at around N960/liter in southern regions like Oyo and Rivers. In Lagos, the pricing is more competitive, with major marketers still managing to sell petrol at approximately N870/liter despite fluctuations elsewhere. Such discrepancies illustrate the ongoing challenges in achieving a uniform fuel pricing system across the country.
The commencement of petrol sales from the Dangote refinery has brought additional dynamics into the pricing equation. Following the refinery’s unveiling of locally-produced petrol, the NNPC raised its prices concurrently, resulting in a significant hike from around N600/litre to prices exceeding N900/litre shortly thereafter. Dangote’s assertion of wanting a specific price for his product initiated negotiations between the NNPC and Dangote Group, which focused on arriving at a mutually agreeable price that still kept them competitive against imported products. This negotiation reflects the market-driven nature of fuel pricing, with both parties vying to maintain profitability while meeting consumer affordability.
As the NNPC continues purchasing petrol from the Dangote refinery, there is cautious optimism among consumers that prices may further decline with the beginning of local crude sales expected on October 1, 2024. This anticipated transition could provide greater pricing stability and potentially lower petrol costs, particularly if the sale of domestically produced crude achieves favorable pricing dynamics. The interaction between market forces, local production capabilities, and international oil prices remains critical in determining fuel costs for motorists across Nigeria.
In summary, the fluctuations in petrol pricing in Nigeria underscore the complexities of fuel markets influenced by currency exchange rates, global crude prices, and local production dynamics. The recent decrease in landing costs, combined with the introduction of competitive pricing from the Dangote refinery, represents a significant moment in Nigeria’s fuel market evolution. The NNPC’s strategic negotiations with Dangote highlight the ongoing challenges of harmonizing pricing across different regions while remaining responsive to market demands, an endeavor that will be closely watched as the local crude sale begins. With hope for more affordable fuel prices on the horizon, consumers, marketers, and regulatory bodies are all keen to observe the developments in this crucial sector.
