Business & Strategy

Rising Fuel Landing Costs Spark Marketer Concerns Over Dangote Petrol Pricing

Written by Agboola Oluwafemi on September 10, 2024

News Views: 249

Oil marketers have expressed concerns over the delay in announcing the price of Premium Motor Spirit (PMS), commonly known as petrol, produced by the Dangote Petroleum Refinery. They noted that the landing cost of imported PMS now stands at approximately N1,120 per litre.

Dealers fear that if Dangote’s petrol price is high, marketers may turn to importation, especially since the government has opened up the market for competition.

In July, the Major Energies Marketers Association of Nigeria revealed that the landing cost of PMS was N1,117 per litre, which is the price at which the product arrives on Nigerian shores.

While pump prices ranged from N600 to N700 per litre in July, last week the Nigerian National Petroleum Company Limited raised prices to between N855 and N897 per litre. Some independent dealers even increased their prices to above N1,000 per litre.

It was also learned on Monday that the delay in releasing Dangote’s petrol price has pushed oil marketers to strengthen discussions with their foreign partners in preparation for potential petrol imports.

Abubakar Maigandi, President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), said that IPMAN is in talks with foreign partners and awaiting Dangote’s pricing. He noted that a high price from Dangote would likely lead to significant PMS imports.

“We are waiting for our foreign partners to calculate how much it will cost to bring the product to Nigeria,” said Maigandi. He added that if the landing cost from abroad is cheaper than Dangote’s, independent marketers would explore importation options.

He explained that competition in the market would lead to better availability of products. “Allowing multiple importers will ensure availability and competition, as marketers will aim to sell their products and purchase new ones,” Maigandi said.

An official from Dangote Group stated that the company’s president, Aliko Dangote, is committed to lowering the price of petrol in Nigeria, regardless of whether the Nigerian National Petroleum Company Limited chooses to be an off-taker.

The official, who requested anonymity, emphasized Dangote’s nationalistic commitment to Nigeria, recalling how the refinery had previously reduced diesel prices from around N1,600 to N950 per litre, before it fluctuated between N1,100 and N1,200 due to foreign exchange rates.

Regarding Dangote’s ability to sell PMS locally despite NNPC’s reluctance to collaborate, the official said, “Alhaji Aliko Dangote is ready to make sacrifices for the nation. We have high-quality PMS ready, and some external interests may not want this to succeed due to their own business stakes.”

While the exact release date for Dangote’s PMS is not yet confirmed, the official assured that the company is “on course.”

The NNPC, in a statement by spokesperson Olufemi Soneye, clarified that it would not buy Dangote PMS unless it is priced lower than the international market rate. This contradicts earlier statements that Dangote was waiting for the NNPC to roll out its product. The NNPC further declared that Dangote and other domestic refineries are free to sell directly to any marketer on a willing buyer, willing seller basis.

Soneye emphasized that domestic refining doesn’t guarantee lower prices compared to global pricing frameworks. He reiterated that the NNPC would only fully off-take PMS from Dangote if the market prices exceed domestic pump prices.

This statement signals that the NNPC may continue to rely on imports, particularly since its refineries are not yet operational.

At the unveiling of the 650,000-capacity refinery, Aliko Dangote had stated that the facility would supply petrol as soon as the NNPC was ready. He had assured that once arrangements with the NNPC were finalized, petrol would reach filling stations within 48 hours, promising an end to fuel shortages.