Despite the ex-depot petrol price reduction by the Dangote Petroleum Refinery on Monday, many marketers have refused to adjust their pump prices, saying they could run into losses.
The marketers who spoke with The PUNCH on Tuesday stated that dropping their pump prices would not be possible unless they exhaust the product purchased at prices around N900 per litre.
The PUNCH reported late on Monday that the Dangote refinery had reduced the ex-depot petrol price from N880 to N840 per litre. The spokesman of the Dangote Group, Anthony Chiejina, confirmed this to our correspondent.
Chiejina stated that the price reduction took effect on June 30. “PMS price has been reduced from N880 to N840 per litre effective 30th June,” he said.
The PUNCH recalls that the Dangote refinery jerked up the price of petrol to N880 as tension escalated during the 12-day conflict between Israel and Iran, raising the price of crude oil to almost $80 per barrel.
Marketers had on Sunday anticipated that there would be a new price regime from Monday. As of Tuesday, our correspondent observed that other depot owners and importers adjusted their prices to reflect the new price regime occasioned by the drop in crude prices following the ceasefire between Israel and Iran.
Down from N920, most of the depots dropped their gantry prices to an average of N845 a litre. According to Petroleumprice.ng, RainOil, Pinnacle, Matrix, Emadeb, Wosbab and First Royal were selling petrol at N845 in Lagos on Tuesday.
Similarly, NIPCO, Aipec and integrated sold premium motor spirit at N850 per litre. In other depots outside Lagos, such as Warri and Port Harcourt, the product was sold at an average of N860.
As the Dangote refinery removed N40 from its gantry price, Nigerians expected that this would be replicated by filling stations but the checks by our correspondent showed yesterday that the price remained the same.
As Dangote partners such as MRS, Heyden and AP have yet to call the shots, it is observed that other filling stations may not change their pump prices. Filling stations dispensed petrol at an average of N920 to N935 in Ogun and other parts of the South West yesterday.
Retail outlets owned by the Nigerian National Petroleum Company Limited have also yet to change their pump prices as of the time of filing this report. NNPC stations sold petrol at N915 in Lagos and N925 in Ogun State.
Experts observed that the pump price of PMS should shrink to N890 or less with Dangote’s N840 gantry price. However, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, said prices have yet to come down because traders were still grappling with old stocks.
When told that the filling stations’ prices were not coming down despite the drop in the ex-depot prices, Gillis-Harry replied, “How will it come down? How will the price come down at the pump? If you, as a Nigerian businessman, bought fuel at N920 and the price came down to N840, what would you do with the change? Multiply N80 by 45,000 litres, how much is that? So, are you going to throw that away? No, that’s not possible,”
The PETROAN president stated that there may not be an immediate price cut until the existing fuel in filling stations was exhausted. According to him, a retailer who loses about N100 per litre from a 45,000-litre stock would not be able to restock.
“We need to exhaust existing stocks. All existing stocks must be sold out first. That is the right business thing to do because if a retail outlet owner loses N100 per litre, and he has to go back to the market to restock, he won’t be able to restock,” he stated.
Gillis-Harry, however, noted that there could be challenges and the pressure to cut prices below cost when those who get the stocks at the new price divert customers from those selling at the old price.
“The only challenge is that there will be retail outlets that will be selling cheaper because maybe they just bought it fresh, and they need to sell it. So, everybody will be waiting for that. That’s how it functions,” he added.
Again, Gillis-Harry expressed concerns over the frequent price changes, saying this must be checked. “These changes in prices need to be checked; they need to be justified. That’s how it works,” he stressed.
Recall that the PETROAN once called on the Nigerian Midstream and Downstream Petroleum Regulatory Authority to adopt a six-month price stability period to prevent losses. The association argued that this would prevent losses, as Dangote refinery and others would have to wait for six months before a price change.
Speaking further, the PETROAN boss charged the Nigerian National Petroleum Company Limited to produce more crude oil for local refineries. “Let me just add that we should do the best we can to produce enough crude oil for local refining,” he stated.
Recall that Dangote, NNPC and other major fuel distributors in Nigeria hiked petrol prices less than two weeks ago, blaming this on the rise in crude oil prices on the international market. The pump prices of petrol hovered between N915 and N955 at the pumps, depending on the location. It was below N900 before the sudden hike.
There were reports that the product was sold at N960 and N980 in the far north because of the distance. However, as crude prices fell below $70 within the past few days, the pump prices of PMS maintained their latest position.
It was noted that crude oil prices crashed because Israel and Iran stopped bombing each other, alleviating fears of a supply disruption in the Middle East.
Brent crude was traded around $67 per barrel, with West Texas Intermediate at $65 per barrel as of Tuesday. They both dipped to as low as $65 and $63 on Saturday. That’s down from over $77 for Brent crude and $73 per barrel for WTI, according to a report by Oilprice.com.
Earlier, the spokesman of the Crude Oil Refinery Owners Association of Nigeria, Eche Idoko, said some marketers still had old stocks to sell. According to Idoko, the price would start to reduce within a week of crude stability.
“Well, it’s not rocket science. The price of crude oil moved up immediately but people were getting stocks, and until the stocks go down, the price cannot change. Let’s give it like a week or two, and we’ll see the price drop,” he said.
On June 21, MRS raised the pump price of PMS to N925 in Lagos, from N885. The change in MRS petrol price came after the Dangote refinery raised the ex-depot price of the product from N825 to N880 the day before.
Since then, MRS started selling petrol at the rate of N955 in the South-East while selling it at N935 in Ogun, Oyo, Ondo, Osun and Ekiti. Also, MRS customers in the North East were buying petrol at the rate of N955 while those in the North West paid N945 for the product.
The prices have yet to change, even as analysts wondered why Dangote did not return the gantry price to N825 a litre instead of N840.
