ABUJA, Nigeria (VOICE OF NAIJA)-The recent decision by Dangote Petroleum Refinery to reduce the ex-depot price of Premium Motor Spirit (PMS) from N950 to N890 per litre has been hailed as a relief for consumers but has left many petroleum marketers counting their losses.
Marketers who spoke on the development suggested that the sudden price reduction may have been influenced by recent warnings that some traders were considering importing fuel, as foreign PMS remained cheaper than locally refined products.
On Saturday night, the 650,000-barrel-per-day refinery announced that it had reduced the price of petrol from N950 to N890 per litre.
“In a bold move to drive economic relief for Nigerians, Dangote Petroleum Refinery has reduced the ex-depot price of Premium Motor Spirit, commonly known as petrol, from N950 to N890 per litre, effective from Saturday.
“This price adjustment is in response to favourable developments in the global energy sector and a significant decline in international crude oil prices. Dangote refinery’s decision reflects its commitment to aligning with market realities and ensuring that consumers benefit from changes in international crude oil prices,”a statement by the Group’s Chief Branding and Communications Officer, Anthony Chiejina, read.
The statement further noted that the price reduction would significantly lower petrol costs nationwide, creating a positive ripple effect across the broader economy.
The refinery urged marketers to ensure that the benefits of the reduced price reach Nigerian consumers.
However, petroleum marketers have expressed mixed reactions, noting that while the reduction has its advantages, it also poses financial challenges.
READ ALSO: Petrol Marketers Reveal Real Reason For Sudden Fuel Scarcity
It was learned that some marketers who purchased fuel just hours before the announcement now face potential losses amounting to millions of naira, as they will have to sell at lower rates.
Speaking on the matter, the Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Hammed Fashola, described the price reduction as a positive development but acknowledged its impact on businesses.
“For instance, maybe a marketer purchased some product on Friday. I am sure the marketer would not have sold it before the new reduction happened. That is the negative aspect of it. But, we have to abide by it. We have to live with it. That is the beauty of deregulation.
“So, we have to be careful when we purchase our product. Where we purchase it from and the price we are getting it. And we must have adequate information on what is going on. So that we will not be losing money every day,”** Fashola explained.
He emphasized that in a competitive market, marketers have no choice but to adjust their prices to avoid being edged out.
“When this happens, the only option a marketer has is to bring down the price. Because if you don’t do that, the competition will set in.
“Some marketers in your neighbourhood might be lucky to get their product tomorrow at N890. So, if you have a N950 product with you, within two to three days, you will not have an option but to bring it down. That is the situation marketers are facing now, but we have to cope with it. It is the marketer who bears the losses,”he stated.
Asked whether all stakeholders could be involved before a major price adjustment to minimize losses, Fashola responded, “There is no way one can do that in this competitive environment that we find ourselves in now. It is a competition.”
He also noted that the recent reduction was likely a response to complaints that imported fuel was cheaper than locally refined PMS.
“Some marketers and importers were threatening that an imported PMS is much cheaper than a Dangote PMS. So, Dangote is reacting to this with the price reduction. That is the beauty of competition. There is nothing anybody can do about that. You want to sell and I want to sell. I think it is good for the sector.
“It is the public that will gain more because, by this, they will be getting cheaper fuel, which is good. That is what we have been pushing for. It has come. We don’t have to complain,”** he maintained.
On whether the Nigerian National Petroleum Company Limited (NNPC) would also reduce its price, Fashola was confident that it would.
“They have to. If they want to remain in business, they have to. It is a reaction, and it will go through the chain of supply. If NNPC says they don’t want to reduce their price, who will go there to buy? They have to reduce it.
“It is the same thing happening to the retailers, the marketers, and the filling stations. The same will happen to them. They have to react to the new market realities. Everybody will react to the new development,”he said.
The National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, has indicated that the Nigerian National Petroleum Company Limited (NNPC) may lower its prices in response to increased market competition.
“There is an evident possibility that the NNPC will reduce prices,” he added
Gillis-Harry stated that PETROAN welcomed the news of Dangote refinery’s petrol price reduction with enthusiasm, highlighting its benefits for both citizens and the economy.
He praised the refinery’s management, emphasizing that the price cut would help alleviate Nigerians’ financial burdens, lower living and transportation costs, and positively impact the economy.
READ ALSO: PETROAN Confirms Retailers Now Lifting Fuel From P’Harcourt, Warri Refineries
Reiterating the advantages of a deregulated market, he expressed optimism that other refinery operators and fuel importers would follow suit by adjusting their prices to remain competitive.
“The reduction in PMS ex-depot price is expected to have a far-reaching impact on the lives of Nigerian citizens. With a decrease in the cost of petrol, the prices of goods and services are likely to decrease, leading to a reduction in the overall cost of living. This, in turn, will provide relief to households, who will have more disposable income to allocate towards other essential needs.
“The reduction in PMS price will also have a positive impact on the economy. A decrease in transportation costs will lead to increased economic activity, as businesses will be able to transport goods and services more efficiently and at a lower cost. Additionally, the reduction in PMS price will lead to an increase in demand for goods and services, which will have a positive impact on economic growth and development,” he said.
Gillis-Harry further noted that the price cut could help curb inflation.
Meanwhile, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, raised concerns about financial losses incurred by traders whenever petroleum product prices, including petrol and diesel, drop.
He recalled that the entry of Dangote refinery into the market in early 2024 led to a sharp reduction in diesel prices, forcing marketers to sell at a loss and accumulate significant debts.
According to Ukadike, many marketers are now hesitant to lift fuel due to the risk of financial losses, particularly after securing bank loans.
“That is why marketers fear lifting fuel because of the price scare. They will not want to suffer collateral losses.
“Remember that when the Dangote refinery came in, it was reducing prices and marketers were losing money. Did anybody tell marketers not to sell again or that they are going to repay them the money lost? Nobody said so and nobody will say so,” he stressed.
He explained that marketers were left to absorb their losses, often forced to sell below their purchase cost.
“It’s like having to sell off because the monetary value of what you have and the interest rate of that will not be able to keep you up. The interest rate is going up faster now,” he noted.
(The Punch)