Stakeholders Give Reason for the Reduction in the Price of Petrol by Dangote and NNPCL

On Saturday, the Nigerian National Petroleum Company Limited (NNPCL) announced a significant reduction in the ex-depot price of Premium Motor Spirit (PMS), commonly known as petrol, to N899 per litre. This move comes in response to a similar price reduction by the Dangote Refinery, which recently adjusted its prices to N899 per litre as well.

The Petroleum Products Retail Outlets Owners Association of Nigeria confirmed the price cut, stating that this new pricing represents a reduction of N141 or 13.56% from the previous price of N1,040 per litre in the Federal Capital Territory. According to a document released by NNPCL’s Commercial Department, marketers can now offtake products based on a regional pricing scheme, with prices set at N899 per litre in Lagos State and N970 per litre at depots in Warri, Oghara, Port Harcourt, and Calabar.

Stakeholders say that the petrol price is reduced by Dangote and NNPCL because of the competitive pressures in the deregulated downstream sector. The pressure is expected to ignite a price war among oil marketers, ultimately benefiting consumers by driving down retail prices. Dr. Joseph Obele, the National Public Relations Officer for the Petroleum Products Retail Outlets Owners Association, expressed optimism that the price of PMS would continue to drop due to the global decline in crude oil prices and the recent appreciation of the Naira against the dollar.

Obele emphasized the benefits of competition, advocating for the immediate privatization of government-owned refineries to further enhance market efficiency. The National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Abubakar Maigandi, echoed this sentiment, stating that Nigerians would benefit from cheaper fuel prices as marketers begin to procure petrol at the reduced rate from NNPCL.

The National Publicity Secretary of IPMAN, Mr. Chinedu Ukadike, welcomed the price reduction, highlighting that healthy competition resulting from deregulation would lead to continuous price decreases. Ukadike attributed the price drop not only to NNPCL’s readiness for a deregulated pricing regime but also to favorable changes in the foreign exchange rate.

When asked about the potential impact on retail prices, Ukadike noted that while specific prices might vary due to factors like logistics, the price at IPMAN-affiliated stations would likely not exceed N1000 per litre, except in regions with high transportation costs, such as the far northern states.

The National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Billy Harry, also praised the price reduction, stating that it would bring significant relief to motorists and the broader Nigerian population during the holiday season. Harry outlined several benefits for consumers, including lower transportation costs, stimulated economic activity, and an improved standard of living due to decreased fuel prices.

Harry commended the Dangote Refinery for its earlier price reduction, which helped stimulate competition in the downstream sector. The Dangote Refinery announced a partnership with MRS Petrol Station to sell petrol at N935 per litre, ensuring that the price reduction reaches the end consumer.

The recent developments in Nigeria’s downstream sector underscore the positive impact of deregulation and competition. As the NNPCL and other major players continue to adjust prices in response to market dynamics, consumers stand to benefit from more affordable fuel prices. The government's commitment to fostering a competitive market environment and the proactive measures taken by industry stakeholders indicate a promising future for Nigeria's petroleum sector, with improved access to essential commodities and enhanced economic growth.