Abuja, Nigeria – Achieves pricing balance on both import and locally refined
• Forex rate may upset the balance – Marketers
• Independent marketers call for more level playing field
• Marketers now free to buy from Dangote —Edun
The latest pricing template for premium motor spirit (PMS), also known as petrol, reveals that the cost of locally refined products has achieved near parity with imported fuel. This balance, however, faces potential disruption due to fluctuations in the foreign exchange rate, petroleum marketers warn.
The Nigerian National Petroleum Company Limited (NNPCL) pricing template shows a 4% increase in the landing cost of imported petrol, rising from N919.55 per litre in September to N956.13 per litre in October 2024. The rise is largely attributed to the Naira’s depreciation, with the exchange rate shifting from N1,625/$ in September to N1,645/$ in October.
As a result, the direct costs of petrol production and distribution now stand at N913.12 per litre, while finance-related costs, including letters of credit and interest, have driven the final landing cost to N956.13. The total retail price at petrol stations, including independent marketers, is hovering around N1,000 per litre, with some independent outlets selling petrol for as high as N1,020 per litre.
Forex rate may upset the balance – Marketers
While these price differences are currently minor, marketers caution that significant shifts in the exchange rate could lead to larger disparities. They also advocate for increased competition and transparency in the market, which they believe will create a more level playing field for all stakeholders.
Independent marketers call for more level playing field
The deregulation of Nigeria’s downstream petroleum sector is expected to foster healthy competition, allowing marketers to buy petrol from both local and international sources. According to Mr. Joseph Ehimen, Chairman of the Lagos State chapter of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), this deregulation opens the door for more modular refineries and competition in the sector.
Marketers now free to buy from Dangote — Edun
The Minister of Finance, Wale Edun, recently confirmed that all petroleum marketers are now free to buy directly from the Dangote Refinery in Lagos. This move marks the end of NNPCL’s monopoly as the sole off-taker of Dangote Refinery products. Edun emphasized that the direct purchase mechanism, in conjunction with local PMS production, would streamline the supply chain and stabilize market conditions.
Industry experts, like the Managing Director of 11 Plc, Adetunji Oyebanji, view the deregulation and subsidy removal as crucial steps toward a more efficient and competitive market. Local refining of crude oil, along with selling in Naira at a fixed exchange rate, is expected to protect consumers from currency fluctuations and reduce the cost of transporting crude oil for refining abroad.
However, Oyebanji warns that PMS prices may now fluctuate based on market dynamics, as the era of fixed pricing and government subsidies has come to an end.