The decision by the Dangote Petroleum Refinery to slash the ex-depot price of Premium Motor Spirit (PMS), also known as petrol, has sparked concerns among petroleum marketers, who fear potential losses due to the sudden price drop.
On Saturday night, the refinery, which has a 650,000-barrel-per-day capacity, announced a reduction in petrol prices from ₦950 to ₦890 per litre. The move, according to a statement by Dangote Group’s Chief Branding and Communications Officer, Anthony Chiejina, aligns with global market trends, including falling crude oil prices. The refinery urged marketers to pass on the benefits to consumers, which could ease economic burdens nationwide.
While the price cut is expected to provide relief to consumers, some marketers are lamenting its negative impact on their businesses. Those who purchased fuel at the previous ₦950 per litre are now forced to sell at a loss.
Hammed Fashola, Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), acknowledged both positive and negative effects of the development.
“If a marketer bought fuel on Friday, they likely haven’t sold it all before the price change. Now, they have no choice but to sell at a loss. That’s the reality of deregulation,” he said.
Fashola also warned that market competition would leave affected marketers with little room for maneuver.
“If a neighboring marketer gets fuel at ₦890 per litre, anyone holding old stock at ₦950 will have no buyers unless they lower their prices,” he explained.
The price cut is seen as a strategic move by Dangote Refinery to counter threats from traders considering fuel imports. Reports indicate that some importers had threatened to bring in cheaper foreign petrol, arguing that Dangote’s ex-depot prices were higher.
“Some marketers and importers have been saying that imported PMS is cheaper than locally refined fuel. Dangote has responded by adjusting its prices. That’s the beauty of competition,” Fashola noted.
With Dangote’s price reduction, industry leaders predict that the Nigerian National Petroleum Company Limited (NNPC) may be forced to follow suit.
Billy Gillis-Harry, National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), welcomed the price cut, stating it would alleviate financial pressure on Nigerians and potentially drive down transportation costs.
“There is a strong possibility that NNPC will reduce its prices too. In a deregulated market, competition ensures that no player can afford to be left behind,” he said.
Meanwhile, Chinedu Ukadike, National Publicity Secretary of IPMAN, highlighted how price fluctuations negatively impact traders.
“When Dangote first entered the market in 2024 and cut diesel prices, marketers suffered losses. The same thing is happening now with PMS,” he explained.
He noted that many marketers secure loans from banks to purchase fuel and fear incurring debts if prices drop too frequently.
“That’s why some marketers hesitate to lift fuel. If the price suddenly drops, they’re stuck with losses,” he added.
Analysts expect the reduced petrol price to lower the cost of transportation, potentially easing inflation and providing some economic relief. However, industry players warn that fluctuating prices pose risks for investors and marketers.