Petrol Price Hits N1,212 Despite Decline in Global Crude Prices

The price of petrol in Nigeria has climbed to an average of N1,212 per litre despite a marginal decline in global crude oil prices.

The latest price represents a 4.7 per cent increase from the previous average of N1,158 per litre, raising fresh concerns about developments in the downstream petroleum market.

Brent crude, which serves as a benchmark for international oil prices, fell from $88.60 to $88.42 per barrel yesterday.

The OPEC Basket, which includes Nigeria’s Bonny Light, also dropped to $90.28 per barrel from more than $94.

Despite the crude price decline, checks by Vanguard showed that MRS, NNPC and Ardova increased their retail petrol prices to N1,205 per litre from N1,125.

Mobil raised its price from N1,209 to N1,215 per litre, while BOVAS moved from N1,210 to N1,217.

Port Harcourt Records Highest Depot Prices

A mid-day report on petroleum product depots showed that 12 facilities in Lagos, Port Harcourt, Calabar and Warri recorded high petrol prices, with the highest reaching N1,735 per litre.

Port Harcourt emerged as the most expensive market, with several depots quoting between N1,668 and N1,735 per litre.

Prudent Depot recorded the highest price at N1,735, followed by Zamson at N1,730. Rain Oil quoted N1,730, while NEPAS stood at N1,732 per litre.

GulfTreasure sold at N1,680, while Duport, IbaChem, Ibeto and T.Time each quoted N1,668 per litre. Integrated, Menj and TMDK were at N1,670.

Lagos recorded considerably lower prices, although some depots also increased their rates.

MRS rose by N15 to N1,207 per litre from N1,192. Pinnacle increased by N17 to N1,203 from N1,186, while NIPCO moved to N1,203 from N1,190.

BONO and Pivot increased their prices to N1,203 from N1,195, while African Terminal and Integrated rose from N1,195 to N1,202.

Dangote Refinery’s petrol price stood at N1,200 per litre, although the report did not state its previous price.

Meanwhile, the Port Harcourt market recorded a decline in some diesel prices. Pivot cut its AGO price from N1,750 to N1,670 per litre.

The significant differences in depot prices across the coastal markets have been attributed to logistics, location, supply availability and prevailing market conditions.

The disparity is particularly notable between Lagos and Port Harcourt. While Lagos petrol prices remained largely between N1,200 and N1,207 per litre, some Port Harcourt depots were more than N500 higher.

The situation could put additional pressure on marketers and retailers that depend on higher-priced depots for their supplies.

Dangote Refinery’s Influence on Prices

An energy analyst who spoke on condition of anonymity said the international oil market had been volatile but was not necessarily at levels that justified the current domestic petroleum prices.

According to him, the dominant position of Dangote Petroleum Refinery in Nigeria was a major factor shaping the market.

“The 700,000 barrels per day capacity refinery is huge and currently controls about 80 per cent of domestic supplies. This explains why the market responds. The actions of the refinery would continue to influence other players in the market,” he said.

Dangote Refinery had itself increased its petrol gantry price by N15, from N1,185 to N1,200 per litre, despite the decline in crude oil prices.

A MEMAN operator, who requested anonymity, said consumers should expect petrol prices to fall gradually as marketers attempt to recover losses accumulated during the recent period of price instability.

“The price is expected to go down slowly because marketers are trying to recover their losses. Marketers have recorded very significant losses over the last 18 months due to the price fluctuations,” he said.

He explained that falling petrol prices create losses throughout the supply chain, prompting marketers to reduce pump prices gradually.

“Losses occur throughout the supply chain every time prices fall. Marketers therefore reduce prices as gradually as possible in order to recover as much as they can,” he said.

He added that marketers immediately reflect increases in their ERP systems, which changes the valuation of their existing inventory before sales begin. When prices decline, however, the adjustment takes a different course.

“This is standard practice in every trading business. What Dangote Refinery can do is try as much as possible to keep costs low, but it is not going to absorb your losses, neither will Dangote subsidise them,” he added.

Oyebanji Opposes Return of Fuel Subsidy

Adetunji Oyebanji, former Managing Director and Chief Executive Officer of 11 Plc, called on governments to focus on targeted interventions to cushion the impact of high petrol prices.

Rather than restoring fuel subsidy, he recommended government support for transportation, healthcare and education.

“Rather than looking for solutions such as subsidising fuel, they should do things like subsidising transportation like the BRT and reduce the cost, and also government hospitals or schools and other things that can make life easier for people,” Oyebanji said.

He warned that a return to fuel subsidy would impose substantial costs on government.

“You can imagine what would have been the case if we were still paying ₦300 per litre for fuel and the product is now ₦1,200. Government would have been absorbing that,” he said.

Oyebanji also called on governments to ensure that increased allocations are reflected in improved living conditions.

“More money is coming to their hands and they should channel it to make life easier for the poor people and common man. This money they are distributing to the governors should be felt by every Nigerian,” he said.

He also proposed increased direct cash transfers and reduced charges for public services.

According to him, movements in crude prices linked to uncertainty around the Gulf are affecting fuel prices worldwide.

Dangote Raises Alarm Over Imported PMS

Dangote Petroleum Refinery and Petrochemicals has meanwhile raised concerns over the continued issuance of licences for petrol imports despite the refinery’s ability to meet and exceed domestic PMS demand.

The company said imported PMS accounted for approximately 43 per cent of fuel supplied to Nigeria in July, based on market data available to it.

It said the continued inflow of imported petrol was creating uncertainty around domestic demand projections and inventory management.

Dangote Refinery said it had consistently maintained sufficient stock and reserved volumes since commencing operations, requiring major investment in storage, logistics and working capital.

However, the company said it was becoming increasingly difficult to plan production and inventory without clear information on the volume of imported petrol expected to enter the country.

“Maintaining large stock positions without clear visibility into import volumes imposes substantial carrying costs on the refinery and ultimately undermines efficient market operations,” it stated.

The refinery said: “As a responsible energy provider, we have always endeavoured to keep adequate reserves to satisfy local demand at all times. However, in an environment where significant volumes of imported PMS continue to enter the market through licences issued by the regulator, and where there is limited visibility on future import volumes, it becomes commercially unsustainable to continue holding excess inventory indefinitely.”

According to the refinery, excess petrol that cannot be immediately absorbed locally has to be exported to other regional and international markets.

“Consequently, DPRP’s export volumes have increased in recent months, not because local demand cannot be met, but because excess inventory generated by market uncertainty must be evacuated to avoid unnecessary storage and financing costs,” the company said.

Dangote Refinery stressed that increased exports should not be interpreted as evidence that it is unwilling or unable to serve the Nigerian market.

Instead, it said the exports were a commercial response to uncertainty created by imported products competing with locally refined petrol.

The refinery reaffirmed that it remained ready, willing and able to meet and exceed Nigeria’s petroleum product needs while continuing to invest in dependable fuel supply.

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