The landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has dropped to ₦981 per litre, according to the Major Energies Marketers Association of Nigeria (MEMAN). This reduction, down from ₦1,130 per litre just a few weeks ago, was attributed to a decrease in global crude oil prices.
#### Crude Oil Price Drop
The decline in petrol landing cost is largely influenced by a drop in the global benchmark, Brent crude oil, which traded at $71.41 per barrel on Thursday, September 25, 2024. Just a day earlier, it was trading at $73.46 per barrel. In August, the average price of Brent was $80.36 per barrel, but recent fluctuations have brought it down to between $70 and $75 per barrel.
The global drop in crude prices followed reduced oil demand in China and the announcement by the Organisation of Petroleum Exporting Countries (OPEC) of plans to increase production. This reduction in crude prices has translated into lower landing costs for petrol and other refined petroleum products like diesel, kerosene, and aviation fuel.
#### Impact on Petrol Importation
The decrease in landing costs comes amid the commencement of petrol importation by major oil marketers, following the deregulation of Nigeria’s downstream oil sector. Previously, the Nigerian National Petroleum Company Limited (NNPCL) was the sole importer of petrol. However, the Dangote Petroleum Refinery has ramped up local production, signaling a shift in the industry.
According to reports, three major oil marketers were expecting vessels carrying 141 million litres of imported petrol last week. Some of these vessels have already arrived in Nigeria, marking the beginning of a new era of fuel imports post-deregulation.
#### Diesel and Aviation Fuel Prices
While petrol landing costs have decreased, diesel and aviation fuel prices remain high. The landing cost for diesel stands at ₦1,089 per litre, while aviation fuel is ₦1,117.34 per litre. The ex-depot price of diesel in Lagos averages ₦1,165 per litre, while in Calabar and Port Harcourt, prices hover around ₦1,200 per litre.
#### Dangote Refinery and NNPC Pricing Negotiations
There has been ongoing discussion between the NNPCL and the Dangote refinery regarding the pricing of locally-produced PMS. NNPCL officials revealed that they entered into lengthy negotiations with Dangote representatives over the price of petrol from the refinery. While some reports claimed the refinery sold petrol to NNPCL at ₦898 per litre, Dangote officials have denied this figure.
NNPCL has announced that the price of petrol from the Dangote refinery would exceed ₦1,000 per litre in the far north of Nigeria, with estimates suggesting prices as high as ₦1,019 per litre in Borno State and ₦999.22 per litre in Abuja, Sokoto, and Kano. In southern states like Oyo and Rivers, prices are expected to be around ₦960 per litre. The lowest price, ₦950 per litre, will be available in Lagos and its surrounding areas.
#### Market-Driven Pricing
Despite reaching an agreement with Dangote, NNPCL’s Executive Vice President of Downstream Operations, Dapo Segun, emphasized that fuel prices will continue to be market-driven. He explained that the pricing of locally-produced PMS would only remain competitive if it is cheaper than imported petrol. Segun confirmed that discussions on the pricing formula took over a week, involving multiple counter-offers and negotiations between the two entities.
#### Future Price Outlook
As the Dangote refinery continues to supply petrol to the NNPCL, there is optimism that the price of PMS will further decrease when the naira crude sale begins on October 1, 2024. This development could provide much-needed relief to Nigerians who have faced soaring fuel prices in recent months. However, the market remains cautious as global crude prices and foreign exchange rates continue to fluctuate.
The fuel market in Nigeria is undergoing significant changes, with the interplay between local production, imports, and deregulation reshaping the industry. The outcome of these developments will determine the future price stability and availability of petrol for consumers across the country.
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