Following Dangote Refinery's recent announcement of another reduction in the ex-depot price of Premium Motor Spirit (PMS), Nigerian petroleum marketers and retailers have indicated that this will likely lead to a decrease in the price of petrol at filling stations across the country.
On Monday, the 650,000 barrels per day Dangote Refinery, situated in Lekki, Lagos State, extended a N10 refund to its customers on every litre of PMS purchased at the rate of N835. This development was independently confirmed by key stakeholders in the downstream petroleum sector.
Marketers Confirm Impending Price Adjustments
Billy Gillis-Harry, the National Secretary of the Independent Petroleum Products Marketers Association of Nigeria (IPMAN), and the National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), both confirmed the N10 refund in separate statements on Monday.
This latest downward adjustment in the refinery's gantry price suggests that filling stations partnering with Dangote Refinery, including prominent names like MRS, AP (Ardova), Heyden, Optima Energy, Hyde, and Techno Oil, are poised to adjust their petrol pump prices in the coming days to reflect this change.
Retail Outlets Prepare for Price Review
As of Monday evening, it was gathered that MRS and other partnering stations were selling petrol at around N910 per litre. However, there are strong indications that this price point is set to decrease.
An anonymous staff member at an MRS filling station along the Kubwa Expressway in Abuja revealed that their outlet anticipates lowering its pump price to N900 per litre between Wednesday and Thursday of this week.
NNPCL Hints at Further Price Relaxation
Adding to the anticipation of lower petrol prices, an unnamed credible source within the Nigerian National Petroleum Company Limited (NNPCL) suggested that the state-owned oil firm might further ease its petrol price to a range of N880 to N900 per litre in the near future.
Efforts to obtain an official statement from Dangote Group's spokesperson, Anthony Chiejiena, regarding this latest petrol price review were unsuccessful at the time of reporting.
Series of Price Reductions Follow Naira-for-Crude Deal
It is noteworthy that Dangote Refinery has implemented at least three petrol price reductions since the Federal Government, through NNPCL, renewed its naira-for-crude agreement with the $20 billion refinery on April 9th.
The initial price adjustment occurred on April 10th, when the ex-depot price of petrol was reduced to N865 per litre from N880. This was followed by a second reduction to N835 per litre. Subsequently, the price was further lowered to N825 per litre before the most recent N10 refund, effectively bringing the price down to N825 per litre for those receiving the refund.
Deregulation Drives Price Volatility and Market Adjustments
Reacting to the consistent price adjustments, IPMAN National Secretary, James Tor, stated that these reviews have become a regular occurrence following the deregulation of Nigeria's downstream petroleum sector.
He emphasized that a reduction in Dangote Refinery's petrol prices is highly likely to have a widespread impact across the market, as marketers source their products from various players, including MRS, NIPCO, and NNPC. Therefore, any decrease in PMS prices at the source will generally translate to lower prices at retail outlets.
Tor also expressed optimism regarding the partnership between NNPCL's new management, led by Bayo Ojulari, and the Dangote Group, suggesting that it could bring much-needed stability to the country's petrol market and provide a clearer direction for the industry.
PETROAN Cautions Against Price Instability Despite Expected Reduction
While acknowledging the expected downward review of petrol prices in response to Dangote Refinery's latest move, PETROAN President, Gillis-Harry, voiced concerns about the persistent instability in petrol pricing resulting from the refinery's frequent price cuts.
He stressed the importance of consistent pricing for the stability of the industry, questioning whether the current volatility aligns with the objectives of the Petroleum Industry Act (PIA). Gillis-Harry speculated that the frequent price adjustments might be a market strategy aimed at capturing a larger market share.
Despite these concerns, PETROAN welcomed the collaboration between NNPCL and Dangote Group, expressing hope that it will ultimately benefit Nigeria and improve access to energy.
Global Crude Oil Prices Show Downward Trend
This development in the Nigerian petroleum market coincides with a decrease in global crude oil prices. As of 3:47 am on Tuesday morning, Brent crude and West Texas Intermediate (WTI) crude blends had fallen to $64.72 and $61.72 per barrel, respectively, according to data from oilprice.com.
Dangote Leadership Engages with NNPCL Management
It is worth recalling that last week, the President of Dangote Group, Aliko Dangote, and his team held discussions with the new management of NNPCL, signaling ongoing collaboration and engagement between the two key players in Nigeria's energy sector.