The price war in the downstream oil sector intensified on Tuesday as major oil marketers moved to offer a lower price against the gantry loading cost of N825 per litre set by Dangote Petroleum Refinery.
This development followed a revelation by marketers that the landing cost of Premium Motor Spirit (petrol) imported into Nigeria has dropped to N774.72 per litre.
Marketers said the continued price plunge may lead to a reduction in the pump prices of PMS to about N800 per litre.
Dealers said the N774.72 per litre landing cost, which factors in various expenses including shipping, import duties, and exchange rates, is a considerable reduction of N50.28 from the N825 per litre offered at the loading gantry of the Dangote Petroleum Refinery.
The situation, according to industry stakeholders, has ignited a price war, with retail marketers now opting to dump the refinery products for imported products on the basis of lower pricing.
Findings also revealed that this decrease in landing cost is expected to influence the price at which petrol is sold to consumers and could increase marketers’ interest in returning to petrol imports.
“Crude oil is a major component in the production of fuel, so a further reduction in its price would definitely warrant a drop in petrol price, and it is possible to drop to N800 per litre,” the National Publicity Secretary of the Independent Marketers Association of Nigeria, Chief Ukadike Chinedu, stated.
Recall that last Monday, NNPC dropped its retail petrol price to N860 and N880 per litre from N945 and N965 in Lagos and Abuja, respectively.
NNPC’s petrol price drop followed Dangote refinery’s retail fuel price reduction to N860 and N880 per litre across its retail partners.
The refinery, in its second price reduction in the new year and the third one in a space of two months, reduced its ex-depot petrol price from N890 to N825 per litre to the delight of Nigerians.
But the reduction by NNPC, the country’s largest fuel supplier, sparked a wave of competitive pricing among private marketers seeking to capture the market share in an environment where consumers are highly sensitive to price fluctuations.
The pain of the price reduction was more significant for petrol importers as they lost an average of N2.5bn daily and N75bn monthly due to the PMS price reduction.deserted, marketers trading there have now switched to private depots. This is likely to force Dangote to reduce its price.
“Rumours are already spreading because private depots are now making good sales. The back and forth of prices has made marketers uncomfortable. They are counting their loss and that is why they now patronise private depots where there is a bit of stability.”
On Monday, oil marketers under the aegis of the Petroleum Products Retail Outlet Owners Association of Nigeria condemned the constant reduction of fuel prices, saying marketers are still counting losses.
Despite deregulation, PETROAN said there is a need for a regulation that will make it mandatory that prices can only be changed after six months.
