Petrol Landing Cost Drops to N981/Litre Amid Global Price Fluctuations

The landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has decreased to N981 per litre, according to data released by the Major Energies Marketers Association of Nigeria (MEMAN) on Thursday. This marks a significant drop from approximately N1,130 per litre in recent weeks, a decline of over N140, largely attributed to a decrease in global crude oil prices.

As of September 25, 2024, Brent crude oil, the global benchmark, was priced at $71.41 per barrel, down from $73.46 the day prior. Throughout August, Brent averaged over $80 per barrel but has since fluctuated between $70 and $75, as reported by industry data from the petroleum ministry. The drop in crude oil prices is linked to reduced demand in China and announcements from the Organisation of the Petroleum Exporting Countries (OPEC) regarding potential production increases.

Despite the reduced landing costs, petrol prices at the pump have seen an increase across Nigeria. Major oil marketers have resumed importing petrol, a shift from previous practices where the Nigerian National Petroleum Company Limited (NNPC) was the sole importer. This change follows the commencement of production at the Dangote Petroleum Refinery, which has begun local petrol production after decades of relying on imports.

On September 18, reports indicated that three major oil marketers were expecting shipments of imported petrol, amounting to about 141 million litres. As of Thursday, some of these vessels have reportedly arrived in Nigeria.

According to MEMAN, the landing cost of petrol began its downward trend in mid-July, even dipping below N950 in early September. The landing cost is calculated using an exchange rate of N1,667.22 to a dollar, despite the ongoing depreciation of the naira.

The average ex-depot price of petrol varies regionally, ranging from N865 to N1,200 in Lagos, N980 to N1,400 in Calabar, and N1,200 to N1,400 in Port Harcourt as of Wednesday. Diesel has a landing cost of N1,089 per litre, while aviation fuel costs N1,117.34 per litre. The average ex-depot price for diesel is approximately N1,165 in Lagos and around N1,200 in Calabar and Port Harcourt.

The disparity between imported petrol and that produced by Dangote is estimated to be about N83. Although Dangote officials have denied selling petrol to NNPC at N898 per litre, no alternative pricing has been provided.

Following the unveiling of locally produced fuel from the Dangote refinery, the NNPC raised petrol prices significantly, from around N600 to between N855 and N900 per litre. Reports indicate that the NNPC plans to sell petrol lifted from the Dangote refinery for over N1,000 per litre in northern states, while prices may reach N960 in southern regions.

Despite these price hikes, some major marketers in Lagos are reportedly selling petrol for as low as N910 per litre. The NNPC’s Executive Vice President for Downstream, Dapo Segun, highlighted the market-driven nature of pricing in negotiations with Dangote’s team. As petrol sales from the Dangote refinery continue, consumers remain hopeful that prices will decline further with the anticipated start of naira crude sales on October 1, 2024.