The landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has decreased to N981 per litre, as reported by the Major Energy Marketers Association of Nigeria (MEMAN) on Thursday. This marks a significant drop from the previous cost of N1,130 per litre, reducing by over N140 as of September 25, 2024, largely due to the recent fall in global crude oil prices.
The cost of crude oil and foreign exchange rates are key factors determining the price of refined petroleum products, including petrol, diesel, aviation fuel, and kerosene. Brent crude, the global benchmark, averaged above $80 per barrel in August 2024 but has fluctuated between $70 and $75 per barrel since the start of September.
According to industry data from the petroleum ministry, Brent crude was priced at $71.41 per barrel on Thursday, down from $73.46 per barrel the previous day. Statistical firm Statistica highlighted that Brent averaged $80.36 per barrel in August, a decline from the previous month, influenced by decreased demand in China and expectations of increased production by OPEC.
Despite the drop in landing costs and rising petrol pump prices across Nigeria, major oil marketers have resumed importing the product. Previously, the Nigerian National Petroleum Company Limited (NNPCL) was the sole importer of petrol. However, with the pump price hike and Dangote Petroleum Refinery commencing production, the market has opened up.
On September 18, 2024, three major oil marketers were expecting the arrival of vessels carrying 141 million litres of petrol following the full deregulation of the downstream oil sector. MEMAN confirmed on Thursday that some of these vessels had already docked in Nigeria.
As Dangote’s refinery ramps up local petrol production, reducing Nigeria’s reliance on imports after more than two decades, MEMAN reported that petrol landing costs began to decline in mid-July, falling below N950 per litre by early September. Notably, this decline occurred despite the naira’s depreciation against the dollar, with landing costs calculated at N1,667.22 per dollar.
The average ex-depot price of petrol, as stated by MEMAN, ranged from N865 to N1,200 per litre in Lagos, N980 to N1,400 in Calabar, and N1,200 to N1,400 in Port Harcourt as of Wednesday. For diesel, the landing cost was N1,089 per litre, while aviation fuel stood at N1,117.34 per litre, with average ex-depot prices of N1,165 in Lagos and N1,200 to N1,300 in Calabar and Port Harcourt.
A price difference of N83 was noted between imported petrol and Dangote’s locally produced fuel, with the NNPC purchasing Dangote’s fuel at N898 per litre. Although Dangote refinery officials denied selling at this price, they have yet to provide a revised figure.
Following the Dangote refinery’s fuel sale, the NNPC raised the price of petrol from approximately N600 to between N855 and N900 per litre. The NNPC also announced regional variations in petrol prices, with rates expected to exceed N1,000 per litre in northern regions like Borno (N1,019/litre) and hover around N999.22/litre in Abuja, Sokoto, and Kano. In southern states such as Oyo and Rivers, the price will be around N960 per litre, with the lowest price of N950 in Lagos and surrounding areas.
While some marketers are still selling at N910 per litre in Lagos, prices in other regions remain significantly higher. In a media briefing, Dapo Segun, Executive Vice President of the NNPC’s Downstream division, stated that petrol pricing is now market-driven, though negotiations with Dangote refinery played a role in determining the current rates.
As Nigerians await the start of crude oil sales priced in naira on October 1, 2024, the hope remains that PMS prices will further decline.
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