Dangote's N950/Litre Petrol: Marketers Predict Increased Importation

Dangote's Steep Petrol Price Sparks Import Fears Among Marketers

The arrival of imported petrol vessels, starting September 17, has raised further questions about the transparency of Dangote Refinery's...

Nigerians face economic hardship as petrol prices soar, LCCI calls for relief through market deregulation & policy interventions.

The Nigerian National Petroleum Company Limited (NNPCL) unveiled the pricing structure for Dangote Petroleum Refinery's Premium Motor Spirit (PMS), or petrol, on September 16. The prices, spanning N950 to N1,019 per litre based on location, have ignited intense debate within the oil industry and private sector.

Industry stakeholders, particularly oil marketers, have expressed apprehension that these elevated prices will perpetuate Nigeria's reliance on petrol imports. This development undermines efforts to promote domestic refining, as the high costs of locally produced petrol may not provide a competitive advantage over imported alternatives.

The arrival of imported petrol vessels, starting September 17, has raised further questions about the transparency of Dangote Refinery's pricing, according to marketers. This development casts doubt on the refinery's ability to meet local demand.

The Organized Private Sector (OPS) has condemned NNPCL's exclusive off-take agreement with Dangote Refinery, citing concerns that it will:

• Stifle competition
• Foster market inefficiencies
• Undermine the benefits of domestic refining

In response, NNPCL justified the pricing, citing that payments for the petrol were made in US dollars. The company explained that naira transactions will only commence on October 1.

Despite assurances from NNPCL that any Dangote discounts would be passed on to consumers, concerns persist about the high cost of locally refined petrol. Oil marketers predict that retailers may sell petrol at inflated rates, potentially reaching N1,200 per litre in some regions.

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has criticized the significant price disparity between locally refined and imported petrol. IPMAN warns that this disparity could:

• Undermine Nigeria's energy self-sufficiency goals
• Render local refining economically unviable

IPMAN emphasized the need for affordable fuel prices to make local refining sustainable, urging policymakers to address the pricing imbalance.

Dangote Refinery has categorically denied selling petrol to NNPCL at N898 per litre, labeling the claim as “misleading and mischievous.” This rebuttal comes amidst growing concerns over the refinery's pricing structure. Anthony Chiejina, Group Chief Branding and Communications Officer at Dangote Refinery, issued the statement on September 15, 2024, setting the record straight.

Industry stakeholders, including the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), are now emphasizing the need for transparency in pricing to build trust and stabilize the market. They're calling for increased competition, including multiple buyers from Dangote's refinery, to ensure fair pricing and prevent monopolistic practices.

Key Concerns:

• Lack of Transparency: PETROAN and others urge NNPCL to be more open about pricing.
• Monopolistic Practices: Allowing multiple buyers to promote competition.
• Fair Pricing: Ensuring prices are competitive to benefit consumers.

The Lagos Chamber of Commerce and Industry (LCCI) has also weighed in, advising NNPCL to let independent marketers decide if they can compete with NNPCL's pricing. This would help create a more level playing field and ultimately benefit consumers.

The Lagos Chamber of Commerce and Industry is sounding the alarm on the devastating impact of high petrol prices on Nigerians. With average incomes already in decline, the chamber warns that skyrocketing fuel costs are exacerbating economic hardship across the nation.

The Situation So Far

Diesel prices, for instance, had been on the rise for three months before finally easing to N1,379.48 per litre in July. This brief respite offers a glimmer of hope that petrol prices might follow suit.

A Call for Relief

Nigerians are eagerly awaiting a gradual reduction in petrol prices, similar to the trends seen with diesel and aviation fuel. The chamber attributes these decreases to market deregulation, highlighting the potential for policy changes to bring relief to struggling citizens.

The Way Forward

To mitigate the economic hardship, the chamber suggests:

• Gradual price reduction: Encouraging a downward trend in petrol prices
• Market deregulation: Allowing market forces to drive prices, as seen with diesel and aviation fuel
• Policy interventions: Implementing measures to support citizens coping with subsidy removal

Addressing these concerns will enable policymakers to mitigate the economic hardship faced by Nigerians, creating a pathway to a brighter, more sustainable tomorrow.