Over the weekend, there were strong signs that the price of Premium Motor Spirit (PMS), also known as gasoline, would plummet much more in 2025.
According to industry experts who talked to Saturday Sun, the price of gasoline, which is currently between N900 and N950 in many gas stations, could drop even more throughout the year to as low as N500 per litre.
Oil players believe that a robust downstream industry driven by the federal government’s deregulation program is the foundation for the anticipated decline in gasoline prices in 2025.
Industry participants claim that the stable foreign exchange policy, price competitiveness, Naira-for-crude policy, and the upcoming construction of the Port Harcourt, Warri, and Dangote refineries are further factors contributing to the price decline. Additionally, they confirmed that allowing refineries to sell their goods on the domestic market and take naira payments will help to lower prices.
The selling of crude to nearby refineries for naira payment was authorized by the Federal Executive Council (FEC) last July.
Additionally, modular refineries have resumed operations, showing optimism about the downstream industry and concluding plans to expand their product portfolio beyond diesel, which was their only product line until recently.
This occurs at a time when Nigeria consumes about 40 million liters of gasoline each day, with domestic manufacture. Truck out data from the Nigerian Midstream and Downstream Regulatory Authority (NMDPRA) shows that NNPCL controls 1.2 million liters, while Dangote Refinery contributes an average of seven million liters, for a total of 8.2 million liters.
Since they now exclusively produce diesel, modular refineries are not an option. Only five of the roughly 25 certified modular refineries in the nation are now operational.
This indicates that only 20.5% of the nation’s gasoline needs are satisfied locally; the remaining 79.5%, or 31.8 million liters, are imported.
roughly 30 million liters of gasoline are being produced at the Dangote Refinery, but only roughly seven million of those liters are sold domestically; this number rose by five million liters in October from its original 25 million liters.
Conversely, the Warri Refining and Petrochemical Company (WRPC), which started operations a few days ago and produces 125,000 barrels per day of kerosene, diesel, and naphtha, is currently producing at 60% capacity.
The 60,000 barrels per day Port Harcourt Refinery, which started operations more than a month ago, is injecting roughly 1.4 million liters of gasoline through blending with straight-run gasoline, 1.5 million liters of diesel, and 2.1 million liters of LPFO before the Warri refinery starts up.
The 150,000 Port Harcourt Refinery 2 is presently undergoing restoration and is 90% complete, according to Mr. Mele Kyari, Group Chief Executive Officer (GCEO), NNPC Ltd. The same is true for the Kaduna Refinery, which is also undergoing rehabilitation. However, a source close to the presidency informed Saturday Sun that the Kaduna Refinery would not be able to start up anytime soon because of the significant financial implications and other technical issues.
Despite Kyari’s recent declaration that NNPC will no longer import gasoline, certain private depot owners and large marketers continued to buy over 30 million liters per day in order to make up for the shortage.
However, in a phone interview with Saturday Sun, Mr. Ukadike Chinedu, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), stated that the upcoming Port Harcourt and Warri refineries will change the game for the downstream industry by encouraging healthy price competition, which is already evident.
He claimed that Dangote and the Nigerian National Petroleum Company Ltd. have both lowered their rates in the previous three weeks, indicating the benefits of having several production sources.
Additionally, he said that the addition of NNPC Ltd. refineries to Dangote’s allows customers and petroleum marketers access to a variety of product sources rather than a monopolistic market.
Ukadike expressed optimism that as more companies expand their capacity to refine petroleum products, gasoline prices will fall even further, below N500 per liter, by 2025.
He reiterated that the Federal Government’s foreign exchange policy is already having some positive effects, with a dollar being worth less than N1,800. He added that if this trend continues, petroleum prices will plummet even more because more foreign exchange will be saved when goods are no longer imported.
He also said that because they are now confident of the market due to increased product demand, more modular refineries are starting to take action to include gasoline refining in their product line.
He claims that the deregulation of the downstream sector, which encourages efficiency, healthy competition, and price competitiveness among competitors for the benefit of customers, is the reason behind all of the advancements in the industry.
The IPMAN Publicity Secretary went on to say that the Federal Government’s naira-for-crude policy is a key element that will influence gas prices in 2025 since it will control inflation and lessen the reliance on foreign exchange.
Ukadike was also supported by Mr. Billy Harry, President of the Petroleum Products Retail Owners Association of Nigeria (PETROAN).
Harry promised that Nigerians would have access to more affordable fuel options as a result of the Port Harcourt and Warri refineries coming online.
According to the PETROAN President, it is extremely likely that Nigerians will be able to afford gasoline by 2025.
As you can see, NNPC has lowered its ex-distribution price for marketers from N1, 045 per litre to N899 per litre, which translates to N925 per litre for end customers at the pumps. I have to say that this is really admirable. Massive dips from N1, 045 to N899 ex-depot are a lot of drops, but these are not little drops.
However, he said that the Dangote refinery also lowered the ex-depot price from N970 to N899.50 per liter. He noted that as long as petroleum products are consistently available, competition will grow and prices would continue to decline in the coming year.
Nigerians will gradually start to see the benefits, which is typical of a deregulated market, according to Mr. Iche Idoko, the Publicity Secretary of the Crude Oil Refiners Association of Nigeria (CORAN), in his contribution.
One of the features of deregulation that we had emphasized was a decrease in prices. There will inevitably be rivalry amongst competitors as the industry adjusts to the regime of complete deregulation, which will ultimately benefit the customers.
Prices, product quality, and credit lines for large purchasers will be the main areas of rivalry, he said.
He claimed that these are the benefits of local refining. The sector will witness these encouraging trends of refiners and suppliers luring customers with price reductions and various incentives as additional regional refineries come online in the upcoming months.
