Fuel marketers are contemplating moving away from Dangote fuel over a significant drop in the cost of imported petrol, which has become cheaper than the price offered by the Dangote Petroleum Refinery.
According to reports, the landing cost of Premium Motor Spirit (PMS) was N922.65 per litre last week, a decrease of N32.35 from the N955 per litre at Dangote’s loading gantry. This reduction, which factors in shipping, import duties, and exchange rates, could potentially change the market dynamics, encouraging marketers to import petrol rather than accept Dangote’s offerings.
This drop in price offers an opportunity for importers to leverage cheaper products, and a lot of dealers are expected to go after imports given the cost advantage. While speaking confidentially, a major marketer explained that the lower cost of imported petrol is an incentive that is attractive. Recently, Dangote Petroleum Refinery stated that the recent price increment from N899.50 was due to increasing crude oil costs, a major determinant for refined petroleum products. However, the landing cost reduction signals a potential reprieve from the volatility in global oil prices.
Despite this price reduction, retail petrol prices in Nigeria have been high, as major marketers sell petrol for between N990 and N1,010 per litre in the Federal Capital Territory. Latest data from the Major Energies Marketers Association of Nigeria revealed that the cost of petrol at the point of import has reduced by 2.2% to N922.65 per litre from N943.75 per litre earlier last week. Also, the price of Brent crude was noted to have dropped, further benefiting the importers.
This change has given independent marketers and private depot owners an opportunity to make profits by sourcing cheaper petrol, with the ex-depot price now ranging from N950 to N990 per litre. Though this is viewed as a welcome development for stakeholders in the downstream oil and gas sector, the price fluctuations are still heavily influenced by exchange rates and freight costs.
Oil marketers in an unexpected twist have imported a total of 76.84 million litres of petrol in just two days, as revealed by data from the Nigerian Port Authority. The importation was facilitated by two vessels that arrived at the Apapa and Tincan ports in Lagos, with another two vessels touching down at the Dangote terminal at Lekki Deep Seaport.
While talking to Punch, the National President of the Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, expressed surprise at these imports and suggested that stakeholders had agreed to desist from importing refined products while the Dangote refinery increased its production capacity.
He said: “Well, is there anybody that has landed imported fuel? I am surprised to hear that. I am very surprised to hear that because NMDPRA is the leader of the non-import agreement. The idea was to give the Dangote refinery 180 days to prove its production capacity.
“So I would be surprised if anybody is importing fuel now. Besides now, we have an industry stakeholder forum that was Inaugurated last week, which will direct happenings in the industry. There was an industry agreement that there should be no import, and Dangote was given a certain number of days to produce a certain quantity daily for us.”
Also, it was reported that Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, stated that the non-import agreement was not binding, but was a mutual understanding, as Dangote’s products had been cheaper than imported ones at the time. The current price shifts have made marketers explore alternatives that offer a better margin, which complicates the dynamics in the Nigerian fuel sector further.
He said: “There was no agreement like that, but it was a mutual understanding not to import. It was because, at the time, Dangote products were cheaper than imported ones.
“NMDPRA is supposed to give (licence to) anyone who can import at a cheaper rate. We all are looking at cheaper rates, and that is what is happening.”
