Fuel market meltdown: Importers feel the heat as Dangote cuts prices

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The landing cost of Premium Motor Spirit (petrol) has surged to an average of N870 per litre, according to a report by the Major Energies Marketers Association of Nigeria (MEMAN). This increase has put pressure on fuel importers and marketers, particularly with the Dangote Petroleum Refinery’s price threatening their margins.

MEMAN reported that the landing cost of petrol was ₦872 per litre on April 28 and ₦868 as of April 29. On April 23, the cost averaged ₦859 per litre, indicating a rising trend. Notably, the cost of importing petrol has now exceeded the Dangote refinery’s announced ex-depot price of ₦835 per litre.

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As a result, importers are struggling to sell their products at profitable rates. According to (link unavailable), prices vary across locations, with some depots in Lagos selling at lower prices compared to those in the South-South region, where logistics costs are higher. For instance, Dangote sold petrol at ₦840 per litre on Thursday, while other marketers sold at prices ranging from ₦838 to ₦890 per litre.

The National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, expressed concerns about the impact of price fluctuations on business. “Business has been very slow, with the up and down price of PMS from arbitrary changes that are not effectively managed by the market forces,” he said

Despite the challenges, Gillis-Harry emphasised the importance of providing energy access to Nigerians. “Regardless of how things are, we have to do business and keep Nigeria’s economy growing. That’s our covenant with Nigeria. That’s PETROAN’s covenant,” he stated.

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Some filling stations, such as SGR, have dropped their prices to N855 per litre, selling below the rates displayed by Dangote partners. In contrast, other stations in Ogun State, like MRS and Heyden, sell petrol at ₦890 and ₦885 per litre, respectively.

The Dangote refinery has consistently slashed petrol prices since the Federal Government began the naira-for-crude deal with the facility. However, importers and PETROAN have complained that the price cuts are negatively impacting their businesses.

A report by S&P Global noted that the pricing of refined petroleum products at the Dangote Petroleum Refinery has incentivised fuel imports into Nigeria. The report stated that the refinery’s reduction in prices was not significant compared to the global fall in prices, encouraging marketers to import fuel from international traders.

According to S&P Global, “Incentives to ship products to West Africa have also come from the pricing at Nigeria’s Dangote refinery. While flat prices have been driven down massively amid falling crude prices, Dangote has not lowered gantry prices for truck volumes significantly.”

The report further stated, “Between April 1 and April 9, the Eurobob M1 swap fell from $734.25 per metric tonne to $603/MT, a 17.9 per cent fall, before recovering somewhat. But over the same period, Dangote’s truck price at the gantry dropped just 1.7 per cent from N880/litre to N865/litre (and later N835)”.

S&P Global concluded that “This has encouraged a flood of products to West Africa, where high domestic prices have led marketers to import from international traders in greater volumes.”

The development highlights the complexities of Nigeria’s petroleum market, where local refineries, importers, and marketers navigate pricing dynamics to meet domestic demand. As the situation continues to unfold, stakeholders will be closely monitoring the impact on the economy and consumers

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