The price of petrol is edging closer to N1,400 per litre in parts of Nigeria following another increase by the Dangote Petroleum Refinery, with the refinery defending the latest adjustment by pointing to the cost of crude purchased earlier and the lengthy process involved in transporting it to Nigeria. Petrol is currently selling for about N1,310 per litre in Lagos and Ogun, while prices have climbed to N1,350 or more in northern states and other locations farther from the refinery.
Dangote Refinery raised its Premium Motor Spirit (PMS) gantry price by N65 per litre, from N1,200 to N1,265, effective August 29. It was the refinery’s third price increase in just eight days, taking the total increase during the period to N100 per litre, or about 8.6 per cent. The refinery had earlier raised its gantry price from N1,165 to N1,185 on August 21 and then to N1,200 on August 26.
A senior Dangote refinery executive explained that current international crude prices cannot be used as the sole basis for determining the price of petrol produced from crude already purchased by the refinery. According to the executive, there is a significant time gap between negotiating a crude purchase, securing a loading window, chartering a vessel, shipping the crude and eventually delivering it to the refinery. The refinery also has to account for crude bought earlier at higher prices and still held in storage.
The latest increase has already filtered into the retail market, with motorists in some locations paying close to N1,400 per litre. The price difference across regions is partly linked to transportation and distribution costs, particularly the expense of moving petrol from the coastal refinery and depots to distant markets. The development has also raised questions about the relationship between international crude prices, domestic refining costs and petrol pump prices, especially as crude prices have recently recorded declines.
Petroleum marketers say the frequent price movements are making business planning increasingly difficult. The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, said exchange rates, government policies, international market conditions and crude price volatility were all contributing to changes in pump prices. He warned that continued tensions involving Iran and the United States could worsen price instability, leaving both marketers and consumers to bear the impact of rising and unpredictable petrol prices.
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