The price war in the petroleum sector has continued to deepen as some retail outlets have dropped the prices of Premium Motor Spirit (petrol) below the N739 per litre recommended by the Dangote Petroleum Refinery.
The PUNCH reports that since the Dangote refinery slashed petrol pump prices from about N900 to N739 in December, many importers and depot owners have lamented mounting losses. To remain competitive, many operators were forced to sell petrol at rates below their costs.
During a survey over the weekend, our correspondent observed that some filling stations now sell PMS cheaper than MRS Oil, the main partner endorsed by the Dangote refinery to champion the price reduction to N739 per litre.
As of Sunday, NIPCO sold PMS at N738 per litre, SAO filling stations sold it at N735, while Akiavic offered the product at N737. An AP filling station beside an MRS outlet in Mowe, Ogun State, dropped its price to N736 per litre.
It was gathered that filling stations located in the same areas now closely monitor rivals’ pump prices to avoid being undercut in the highly competitive market. Our correspondent reports that motorists troop to stations offering the lowest prices, leaving outlets selling at higher rates struggling for customers.
According to the Major Energies Marketers Association of Nigeria, the landing cost of petrol averaged N762.38 per litre, while Dangote’s ex-gantry price remained N699. But even with the difference, importers still adjusted prices to compete with the Dangote-backed MRS.
It was reported earlier that both Dangote and importers were counting losses running into billions of naira.
Operators who spoke with our correspondent said the decision to lower pump prices had nothing to do with whether imported petrol was cheaper or not. According to them, players across the market were simply striving not to be left behind.
“This is not a function of whether imports are better or not, but simply a market strategy to get a good share of the market. However, it needs to be stressed that we are not at war with any marketer or depot operator nor any refinery,” an operator, who spoke in confidence due to the stiff competition in the downstream, told The PUNCH.
On December 12, the Dangote refinery surprised depot owners and marketers when it slashed the gantry price of petrol by N129, from N828 to N699 per litre.
A few days later, the President of the Dangote Group, Aliko Dangote, said he had information that some marketers planned to keep pump prices high despite the reduction. Consequently, Dangote vowed to enforce the new pricing regime, with MRS selling petrol at N739 per litre.
“We are going to use whatever resources we have to make sure that we crash the price down. For December and January, we don’t want people to sell petrol for more than N740 nationwide. Those who want to keep the price high to sabotage the government, we will fight as much as we can to make sure that these prices are down. If you have money to come and buy, you can pick up petrol at N699,” Dangote said.
The PUNCH earlier reported that as more MRS filling stations in Lagos and Ogun states began dispensing Dangote refinery petrol at N739 per litre, motorists started boycotting outlets selling at higher prices. This led to fuel queues at MRS filling stations in Lagos and other locations.
However, the tide is gradually turning as some filling stations now sell petrol at prices lower than those of MRS.
The spokesperson for the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, said marketers who refused to reduce prices would lose customers as bank interest charges accumulate.
“We are in a situation where competition can be determined by price. Patronage will be determined by pricing. Nobody is against you; nobody is regulating you. You will regulate yourself. The market will regulate itself. The time has gone when people were queuing at NNPC filling stations. Wherever the fuel is cheap, that is where the marketers go. So, we are in a price war. Demand and supply determine the price,” Ukadike said.
He added that once Dangote reduced the gantry price to N699, marketers would move towards competitive pricing to retain customers; “if not, interest from banks would be ‘eating’ your capital.”
Our correspondent reports that many filling stations now sell petrol below N800 per litre.
Price war: Retailers drop petrol below Dangote’s N739/litre
