Tayo Busayo, Abuja
DAILY COURIER - In a move aimed at providing economic relief to Nigerians, the Dangote Petroleum Refinery announced a significant reduction in the ex-depot price of Premium Motor Spirit (PMS), commonly known as petrol, from N950 to N890 per litre, effective Saturday night. The decision, however, has left many petroleum marketers grappling with financial losses, even as stakeholders hailed the potential benefits for consumers and the broader economy.
The price reduction, attributed to favourable developments in the global energy sector and a decline in international crude oil prices, was disclosed in a statement by Anthony Chiejina, the Group’s Chief Branding and Communications Officer. Chiejina emphasized that the adjustment reflects Dangote Refinery’s commitment to aligning with market realities and ensuring that Nigerians benefit from changes in global oil prices.
“This price adjustment is in response to favourable developments in the global energy sector and a significant decline in international crude oil prices. Dangote Refinery’s decision reflects its commitment to aligning with market realities and ensuring that consumers benefit from changes in international crude oil prices,” the statement read.
The refinery also urged marketers across the country to ensure that the benefits of the reduced price are passed on to the public. However, the sudden price cut has had a dual impact on petroleum marketers, with some facing significant financial setbacks.
For many marketers, the announcement came as a shock, particularly for those who had purchased petrol at the higher price just hours before the reduction. These marketers are now forced to sell their stock at a loss, incurring debts running into millions of naira.
Hammed Fashola, Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), acknowledged the positive and negative implications of the price reduction. While he described the move as a good development for the economy, he highlighted the challenges it poses for marketers.
“For instance, maybe a marketer purchased some product on Friday. I am sure the marketer would not have sold it before the new reduction happened. That is the negative aspect of it. But, we have to abide by it. We have to live with it. That is the beauty of deregulation,” Fashola explained.
He noted that marketers have no choice but to reduce their prices to remain competitive, even if it means selling at a loss. “When this happens, the only option a marketer has is to bring down the price. Because if you don’t do that, the competition will set in. Some marketers in your neighbourhood might be lucky to get their product tomorrow at N890. So, if you have a N950 product with you, within two to three days, you will not have an option but to bring it down,” he added.
The price reduction is also seen as a strategic response to recent threats by some traders to resort to importing cheaper PMS if locally refined products remained more expensive. Fashola confirmed that Dangote Refinery’s decision was a direct reaction to these threats, underscoring the competitive nature of the petroleum market.
“Some marketers and importers were threatening that imported PMS is much cheaper than Dangote’s PMS. So, Dangote is reacting to this with the price reduction. That is the beauty of competition. There is nothing anybody can do about that. You want to sell, and I want to sell. I think it is good for the sector,” Fashola stated.
He expressed optimism that the Nigerian National Petroleum Company Limited (NNPCL) would also reduce its prices to remain competitive. “They have to. If they want to remain in business, they have to. It is a reaction, and it will go through the chain of supply. If NNPC says they don’t want to reduce their price, who will go there to buy? They have to reduce it,” he emphasized.
The reduction in PMS prices has been widely welcomed for its potential to alleviate the economic burden on Nigerians. Billy Gillis-Harry, National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), commended Dangote Refinery for the move, stating that it would reduce the cost of living and transportation while stimulating economic activity.
“The reduction in PMS ex-depot price is expected to have a far-reaching impact on the lives of Nigerian citizens. With a decrease in the cost of petrol, the prices of goods and services are likely to decrease, leading to a reduction in the overall cost of living,” Gillis-Harry said.
He added that the reduction would also positively impact the country’s inflation rate and boost economic growth by lowering transportation costs and increasing demand for goods and services.
Despite the broader economic benefits, marketers remain wary of the financial risks associated with sudden price changes. Chinedu Ukadike, National Publicity Secretary of IPMAN, recalled how the Dangote Refinery’s entry into the market in early 2024 led to a crash in diesel prices, forcing marketers to sell below cost and incur significant losses.
“Marketers fear lifting fuel because of the price scare. They will not want to suffer collateral losses. Remember that when the Dangote refinery came in, it was reducing prices, and marketers were losing money. Did anybody tell marketers not to sell again or that they are going to repay them the money lost? Nobody said so, and nobody will say so,” Ukadike lamented.
He noted that marketers are often left to bear the brunt of such losses, particularly in a high-interest-rate environment where loans taken to purchase fuel become increasingly difficult to repay.
The Dangote Refinery’s decision to reduce petrol prices has sparked a mix of optimism and concern. While the move is expected to provide much-needed relief to Nigerian consumers and stimulate economic growth, it has also exposed the vulnerabilities of petroleum marketers in a deregulated and highly competitive market. As stakeholders navigate these challenges, the broader hope is that the reduction will mark a turning point in Nigeria’s efforts to achieve energy independence and economic stability.
