RECENT data released by the Major Energies Marketers Association of Nigeria indicates that the landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has fallen to N981 per litre.
This marks a decline from approximately N1,130 in previous weeks, a reduction of over N140, as of September 25, 2024, attributed to a decrease in global crude oil prices.
The costs of refined petroleum products, including petrol, diesel, and aviation fuel, are primarily influenced by crude oil prices and foreign exchange rates.
In August 2024, Brent crude, the global benchmark, traded at an average of over $80 per barrel but has fluctuated between $70 and $75 per barrel this month. On Thursday, Brent was priced at $71.41 per barrel, down from $73.46 the previous day, according to industry data from the petroleum ministry.
Statistica, a global statistical firm, reported that the average price of a barrel of Brent was $80.36 in August 2024, indicating a decrease from the prior month due to lower oil demand in China and announcements from the Organisation of Petroleum Exporting Countries regarding increased production.
In light of the reduced petrol landing cost, major oil marketers have started importing the product. Previously, the Nigerian National Petroleum Company Limited (NNPC) was the sole importer, but following a hike in pump prices, the Dangote Petroleum Refinery has also begun production and release of petrol.
As reported on September 18, 2024, by The PUNCH, three major oil marketers anticipated the arrival of vessels carrying imported petrol, which they confirmed had begun to arrive. The vessels were set to deliver about 141 million litres of PMS to Nigeria, following the full deregulation of the downstream oil sector by the Federal Government.
Despite the drop in petrol landing costs, the average ex-depot price of petrol varied significantly, ranging from N865 to N1,200 in Lagos, N980 to N1,400 in Calabar, and N1,200 to N1,400 in Port Harcourt as of Wednesday. The Major Energies Marketers Association of Nigeria also revealed that the landing cost for diesel is now N1,089 per litre, while aviation fuel stands at N1,117.34. The average ex-depot price of diesel was approximately N1,165 in Lagos and around N1,200 in Calabar and Port Harcourt.
There is a noted difference of about N83 between the price of imported petrol and that from Dangote if calculated using the N898 figure claimed by the NNPC for purchasing Dangote fuel. Officials from the $20 billion refinery, however, have denied selling their fuel at N898 to the NNPC but have not provided an alternative figure for over a week.
It is important to recall that on the same day the Dangote refinery launched its locally produced fuel, the NNPC increased petrol prices from around N600 to N855 and N900 per litre. Following this, the NNPC announced that petrol sourced from the Dangote refinery would be priced above N1,000 per litre in northern regions.
NNPC spokesperson Olufemi Soneye explained that prices could reach as high as N1,019 per litre in areas like Borno State and N999.22 in Abuja, Sokoto, and Kano, while prices in southern regions like Oyo and Rivers would be around N960 per litre. According to an infographic from the NNPC, the lowest price recorded was N950 in Lagos and its surroundings.
Despite petrol prices soaring to N1,200 or more in some Nigerian regions, some major marketers are still selling at N910 per litre in Lagos. In a recent media interaction, Dapo Segun, the Executive Vice President, Downstream at the NNPC, explained that while they have reached an agreement with Dangote refinery management, pricing remains determined by market conditions.
“Dangote said to us, ‘This is how much I want for it (PMS)’. And we say, ‘Hey, Dangote, if we go out there, we can get it for this much, so we won’t pay you this much for it.’ We went into negotiation, which took over a week to finalize. They (Dangote officials) will come with their position, we’ll come with a counter; they’ll revise, and we’ll counter again,” Segun said, emphasizing a point made by Soneye that the NNPC would lift Dangote PMS only if it was cheaper than imports.
As sales of PMS to the NNPC continue at the Dangote refinery, there is hope among Nigerians that prices will decrease further when the naira crude sale commences on October 1, 2024.
(PUNCH)
