The landing cost of Premium Motor Spirit (petrol) in Nigeria declined to N922.65 per litre on Friday, reflecting a reduction of N32.35 from the previous rate of N955 per litre at the Dangote Petroleum Refinery’s loading gantry. This adjustment incorporates factors like shipping, import duties, and fluctuating exchange rates.
Despite this reduction, retail petrol prices in the Federal Capital Territory remain high, ranging between N990 and N1,010 per litre. Dealers suggest the decreased landing cost may renew interest among marketers in petrol imports. One major marketer noted, “The lower cost of imported petrol often incentivizes dealers, and marketers cannot be blamed for importing the product.”
The decline in landing cost mirrors improvements in global market conditions and supply chain logistics, offering some relief amidst ongoing challenges. For instance, Brent crude prices, a benchmark for refined petroleum products, fell slightly from $78.88 to $78.29 per barrel, alongside a stable exchange rate of N1,550 per dollar.
Furthermore, the cost reductions have begun to influence loading depot prices. Nipco, Aiteo, and Sahara recorded price decreases, with Sahara reducing prices by N20 per litre to close the week at N960. Similarly, Bulk Strategic Depot in Port Harcourt reduced its rates from N1,005 to N981, a drop of N24.
Import Dynamics and Stakeholder Positions
Recent data from the Nigerian Ports Authority reveals that marketers imported 76.84 million litres of petrol within two days, utilizing vessels berthed at Apapa, Tincan, and the Dangote terminal. These imports contrast with a purported industry agreement discouraging refined product imports.
The National President of the Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, expressed surprise at these imports, emphasizing a stakeholder consensus to grant the Dangote Refinery a 180-day period to demonstrate its production capacity. He stated, “The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) was to halt import licenses for this duration to support local production.”
However, Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, clarified that the non-import directive was a mutual understanding, not a binding agreement. He added, “NMDPRA should license anyone who can import at a cheaper rate. This focus on affordability drives current market trends.”
Market Outlook
The latest adjustments in landing costs and depot prices present a more profitable environment for stakeholders in Nigeria’s downstream oil and gas sector. Nonetheless, the market remains sensitive to exchange rate fluctuations and freight costs, requiring consistent policy and operational strategies to ensure sustainable pricing and supply stability.
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