With fuel landing costs on the rise, marketers express concerns over potential high petrol prices from Dangote Refinery, which could impact the broader market and consumers.
The delay in announcing the price of Premium Motor Spirit, also known as petrol, produced by Dangote Petroleum Refinery is causing unease among oil marketers. This is because they have observed that the landing cost of imported PMS currently stands at approximately N1,120/litre.
According to dealers, if the Dangote refinery sets a high PMS price, marketers may resort to importing the product as competition has been introduced in the market by the government.
The Major Energies Marketers Association of Nigeria disclosed in July that the landing cost for PMS was N1,117 per litre. The term “landing cost” refers to the price at which the product arrives on Nigerian soil.
In July, petrol prices at fuel pumps varied from N600 to N700 per litre. However, the Nigerian National Petroleum Company Limited recently increased costs to between N855 and N897 per litre. Additionally, certain independent dealers have raised their prices even higher than 1,000 naira per litre.
On Monday, it was discovered that the postponement of revealing the cost of Dangote fuel had intensified conversations between oil dealers and their overseas associates as they aimed to commence gasoline imports.
Abubakar Maigandi, the National President of Independent Petroleum Marketers Association of Nigeria (IPMAN), announced that they were in conversation with their international partners and anticipating Dangote’s petrol pricing. However, he cautioned that if Dangote charged exorbitantly high prices, it would result in substantial importation of Premium Motor Spirit (PMS).
We are currently awaiting the calculation of landing costs for petrol by our foreign partners, in order to determine the cost of importing this product into Nigeria. This data will also assist independent marketers with their own imports. As a result, we must await its receipt from them.
Once we acquire data from our foreign partners, I will disclose the genuine landing cost to you. If this expense is lower than what Dangote refinery offers for their product, then we shall explore options of procuring it.
He stated that since the market is now open, they will purchase from any vendor offering good quality at a lower rate. The price of Dangote PMS remains unknown to them and they are anticipating its release by the refinery authorities. Nonetheless, conversations regarding it are ongoing with their international associates.”
Maigandi stated that enabling multiple importers of PMS would guarantee availability and foster competition.
Allowing everyone to bring in the product ensures a certain availability of products.
He stated that as soon as competition arises, everyone will attempt to sell their products and acquire new ones in order to generate profits.
The price of petrol from Dangote
According to a representative of the Dangote Group, Alhaji Aliko Dangote, the group’s President is committed to reducing petrol prices by any means necessary.
An unnamed official, unable to speak on the matter due to lack of authorization, stated that Dangote intends to sell PMS in Nigeria irrespective of whether or not Nigerian National Petroleum Company Limited agrees to be its off-taker.
As per the source, Aliko Dangote is a patriotic individual with an affection for his nation. He exhibits willingness to endure hardships in order to benefit the public.
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He remembered how the refinery lowered diesel prices from approximately N1,600 to N950. However, due to foreign exchange fluctuations, it began fluctuating between N1,100 and N1,200.
According to the source, diesel began at a cost of N1,700. We then lowered it significantly to N1,200 and later to N950. Currently, it fluctuates around N1,100 and N1,200. This resulted in those exploiting the nation with substandard diesel also lowering their prices. The source states that they are willing to repeat this process again if necessary.
When asked about the possibility of Dangote selling his PMS within the local market despite NNPC’s reluctance to collaborate with the refinery, our source affirmed that it is highly feasible. They explained how Alhaji Aliko Dangote holds a strong sense of patriotism towards Nigeria and has displayed readiness to make sacrifices for its good.
“We are willing to accommodate the needs of the country and provide superior PMS products. However, some individuals involved in fuel importation or refinery and blending plant ownership abroad resist this progress due to concerns over their $117 billion shipping enterprise in West Africa.”
The official reassured that they were on track with the PMS release and claimed to be proactive in their approach, stating “We are ‘talk and do’. We turn talk into action.”
The official stated that although the Dangote Group is awaiting a response from NNPC, they will make their own decision if cooperation with the state-owned company does not occur.
On Saturday, the NNPC made it clear through its spokesperson, Olufemi Soneye, that they would only acquire Dangote PMS if it bears a lower cost than what is prevalent in the global market.
Aliko Dangote’s assertion that the refinery was waiting for NNPC to release its product is contradicted by this.
It was stated by the NNPC that Dangote and other local refineries have the liberty to sell their products directly to any willing marketer on a willing buyer, willing seller basis. The organization made it clear that they do not intend or aspire to become distributors for any entities in a market setting characterized by freedom of trade.
The DRL or any other domestic refinery’s access to the Nigerian market remains unaffected by the recent fluctuations in PMS prices. In fact, if present rates are deemed excessive, it offers a prime window for refineries to vend their goods at more affordable costs within Nigeria.
According to Soneye, there is a possibility for the Dangote refinery to reduce its prices in case they become too expensive.
According to the NNPC, it should be noted that domestic refining does not necessarily ensure lower prices compared to a global parity pricing framework. This has been confirmed by the DRL. Furthermore, the NNPC Ltd will only purchase PMS from DRL entirely if market prices are above pump prices in Nigeria.
According to our correspondent, the statement released by NNPC suggests that importation will continue as their refineries have not yet started operating.
After the introduction of its PMS, it seemed like NNPC had disregarded the Dangote refinery.
Upon revealing the 650,000-capacity refinery, Aliko Dangote declared that petrol production would commence as soon as the NNPC was prepared.
After finalizing all the arrangements with NNPC, Dangote revealed that within 48 hours from Tuesday, petrol would be available at filling stations and the long queues will come to an end.
The president of the group stressed that selling and distributing the product is under the jurisdiction of NNPC, as per their present crude sale agreement in naira.
Dangote stressed that the moment NNPC is prepared, we will commence.
