The price war in Nigeria’s downstream oil sector escalated further on Tuesday as major oil marketers moved to offer petrol at rates lower than the ₦825 per litre ex-depot price set by Dangote Petroleum Refinery.
Naija News reports that this development follows revelations that the landing cost of imported Premium Motor Spirit (PMS) has dropped to ₦774.72 per litre, a decrease that may force pump prices down to around ₦800 per litre in the coming weeks.
Dealers revealed that the ₦774.72 per litre landing cost, which includes shipping, import duties, and exchange rate fluctuations, is ₦50.28 lower than the ₦825 per litre ex-gantry price at Dangote Petroleum Refinery.
This price advantage has sparked a shift among independent and major marketers, who are now ditching Dangote’s product for imported fuel, intensifying the price competition in the sector.
Speaking on the development, National Publicity Secretary of the Independent Marketers Association of Nigeria, Ukadike Chinedu, in a chat with Punch, projected that a further reduction in crude oil prices could push PMS pump prices down to ₦800 per litre.
NNPC, Dangote Refinery Slash Prices Amidst Competition
Last Monday, the Nigerian National Petroleum Corporation (NNPC) reduced its retail petrol price to ₦860 and ₦880 per litre, down from ₦945 and ₦965 per litre in Lagos and Abuja, respectively.
NNPC’s price cut followed a similar reduction by Dangote Refinery, which slashed its ex-depot petrol price from N890 to N825 per litre, marking its third price reduction in two months.
Despite these adjustments, private marketers have capitalized on the falling import costs to offer even lower prices, thereby creating a challenging market environment for the refinery.
Private Depots Undercut Refinery’s Price
Findings by The PUNCH indicate that private depots are now offering lower rates than marketers lifting directly from Dangote Refinery.
An analysis of depot pricing revealed that:
AA RANO Depot – ₦830 per litre
MENJ Depot – ₦830 per litre
MRS Tincan – ₦830 per litre
WOSBAB Depot – ₦832 per litre
AITEO Depot – ₦832 per litre
RAINOIL Depot – ₦831 per litre
In contrast, marketers who lifted two million litres from Dangote Refinery at ₦825 per litre are selling at ₦835 per litre, making just a ₦1 profit while still pricing ₦4 higher than private depots.
Oil and gas analyst, Olatide Jeremiah, predicts that Dangote Refinery may be forced to cut its ex-gantry price further to regain market share.
“Marketers are increasingly sourcing from private depots, which offer greater price stability,” he said.
Providing insight into the shifting market dynamics, Jeremiah explained: “Last week, PMS and diesel prices started dropping. By Thursday, prices fell below Dangote’s ex-depot rate.
“The refinery price is ₦825 per litre, but when you add ₦9 for NMDPRA fees, the total reaches ₦834 per litre.
“Private depots, however, secured cheaper products at rates lower than Dangote’s coastal price of ₦780 per litre.”
He added that the cost of transporting products from Dangote Refinery to trucks ranges between ₦40 to ₦45 per litre, making it an expensive option for marketers.
“At Dangote’s depot today, the place was almost deserted. Many marketers have switched to private depots where there is less price volatility,” Jeremiah noted.
Oil Marketers Decry Frequent Price Reductions
Meanwhile, members of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN) have criticized the frequent price changes, arguing that marketers continue to record losses.
Despite the full deregulation of the petroleum sector, PETROAN has called for a six-month regulatory timeframe for price adjustments to create market stability.
With Dangote Refinery under mounting pressure and private importers securing cheaper alternatives, industry analysts suggest that the Nigerian fuel market is on the verge of another major shake-up, with consumers likely to benefit from further price reductions in the coming weeks.
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