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This marks a reduction of over N140 from the previous weeks, where the cost was approximately N1,130, attributed to the recent decline in global crude oil prices as of September 25, 2024.
The prices of crude oil and foreign exchange rates are key determinants of the costs associated with refined petroleum products, including petrol, diesel, aviation fuel, and kerosene.
In August 2024, Brent crude, the global benchmark, traded at an average of over $80 per barrel but has since fluctuated between $70 and $75 per barrel this month. On Thursday, it was priced at $71.41 per barrel, down from $73.46 per barrel the day before, according to data from the petroleum ministry.
Data from Statistica, a global statistical firm, indicated that the average price of a barrel of Brent in August 2024 was $80.36.
This represented a decline from the previous month, driven by reduced oil demand in China and announcements from the Organisation of Petroleum Exporting Countries regarding plans to increase production.
In light of the decrease in petrol landing costs and the increase in retail prices nationwide, major oil marketers have begun importing petrol. Previously, the Nigerian National Petroleum Company Limited was the exclusive importer of petrol until the recent surge in pump prices and the initiation of production by the Dangote Petroleum Refinery.
On September 18, 2024, reports indicated that three significant oil marketers were anticipating the arrival of imported petrol vessels the previous week, assuming no unexpected issues arose.
The marketers noted that approximately 141 million liters of PMS were being transported to Nigeria by these vessels, following the full deregulation of the downstream oil sector by the Federal Government. They confirmed on Thursday that some of these vessels had indeed reached Nigerian shores.
This development coincides with the Dangote oil refinery increasing its local petrol production after more than twenty years of reliance on fuel imports. According to the Major Oil Marketers Association of Nigeria (MEMAN), the landing cost of petrol began to decline in mid-July, dropping below N950 in early September.
This decline occurred despite the strengthening of the dollar against the naira, with the landing cost calculated at N1,667.22 to one dollar.
The average ex-depot price of petrol, as reported by MEMAN, ranged 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. Major marketers indicated that the current landing cost of diesel is N1,089 per litre, while aviation fuel is priced at N1,117.34. The average ex-depot price for diesel is approximately N1,165 in Lagos and between N1,200 and N1,200 in both Calabar and Port Harcourt.
It was noted that the price difference between imported petrol and that from Dangote could be N83, based on the N898 price claimed by the Nigerian National Petroleum Company (NNPC) for Dangote fuel. Although officials from the $20 billion refinery have denied selling their fuel at N898 to the NNPC, they have not provided an alternative figure for over a week.
It is worth mentioning that the NNPC increased petrol prices on the same day the Dangote refinery launched its locally-produced fuel. The price of PMS surged from around N600 to between N855 and N900 per litre. Following the start of PMS sales, the NNPC announced new pricing structures.
According to the NNPC, petrol sourced from the Dangote refinery will be sold for over N1,000 per litre in the northern regions.
NNPC spokesperson Olufemi Soneye stated that prices could reach as high as N1,019 per litre in areas like Borno State, while being N999.22 in Abuja, Sokoto, Kano, and similar locations. In southern regions such as Oyo and Rivers, the price is set at N960 per litre, with the lowest price reported at N950 in Lagos and its surrounding areas, as per an infographic released by the NNPC.
It has been noted that while petrol prices in certain regions of Nigeria have soared to N1,200 or more, some major marketers in Lagos continue to offer a litre for N910. In a recent media discussion with prominent journalists, Dapo Segun, the Executive Vice President of Downstream at the NNPC, clarified that although an agreement has been established with the management of the Dangote refinery, pricing is ultimately determined by market conditions.
Segun provided details about the negotiations between the NNPC and Mr. Aliko Dangote. “Dangote indicated to us, ‘This is the price I am asking for PMS.’ We responded, ‘Dangote, we can source it for this amount in the market, so we cannot agree to your price.’ This initiated a negotiation process that lasted over a week. Dangote's representatives presented their stance, and we countered; they revised their position, and we responded again.
Ultimately, we successfully reached a consensus on the price to be paid,” Segun stated, reiterating a point made by Soneye that the company would only procure Dangote's PMS if it was less expensive than imported alternatives.