Petrol Landing Cost Surpasses Dangote Refinery Price, Fuel Importers Struggle with Profit Margins
The landing cost of Premium Motor Spirit (PMS), or petrol, has now reached an average of N870 per litre, surpassing the price offered by Dangote Petroleum Refinery, according to reports from the Major Energies Marketers Association of Nigeria (MEMAN). The cost of importing petrol increased to N872 per litre by April 28, up from N859 on April 23, placing additional strain on importers who are now facing challenges in selling at profitable rates. In comparison, Dangote’s ex-depot price of N835 per litre threatens the margins of fuel marketers across the country.
As the landing cost of petrol continues to rise, prices at various stations have been inconsistent. While Dangote and other distributors like Matrix (Lagos) and Rainoil are selling at prices ranging from N840 to N889, prices fluctuate depending on location, with South-South regions generally paying more due to logistical costs. The inconsistency in pricing has led to slower business and frequent fluctuations, according to Billy Gillis-Harry, National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), who emphasized the difficulty of managing these price shifts effectively.
Despite the ongoing challenges, PETROAN remains committed to providing energy access to Nigerians, with Gillis-Harry stating that the association’s covenant with the country is to continue supporting its economy. However, the rising costs of importing petrol, exacerbated by the competition from Dangote’s lower prices, have forced importers to sell below cost at times, resulting in significant financial strain. In particular, the suspension of the naira-for-crude deal and Dangote’s discontinuation of naira-based sales led to a spike in PMS prices, with some prices reaching as high as N950 per litre.
Meanwhile, Dangote’s pricing strategy, which has seen consistent price cuts for petrol, is also under scrutiny. S&P Global noted that despite global price reductions, Dangote’s refinery did not lower its prices significantly, which has encouraged increased imports into West Africa. This price disparity has made importing fuel more attractive to marketers, contributing to a rise in fuel imports despite Nigeria’s domestic refinery capacity. The fluctuation in prices and the ongoing challenges facing the petroleum sector highlight the need for more stable market management and policy intervention.