Petrol Prices Drop as Naira Strengthens and Crude Costs Fall
The landing cost of petrol in Nigeria has decreased from N981 per litre, recorded on September 25, to N945.63 per litre as of September 27, according to data released by the Major Energy Marketers Association of Nigeria (MEMAN) on Monday. This decline comes amid the naira’s appreciation against the US dollar and a dip in global crude oil prices.
MEMAN’s report highlights that the exchange rate for the dollar stood at N1,586.26 on September 27, a significant improvement from N1,667.22 just two days earlier. The drop in Brent crude, the international benchmark, from $73.67 per barrel to $72.45 over the same period also contributed to the reduction in the landing cost of imported petrol.
While the shift may seem marginal, it signals a glimmer of relief for consumers. Average ex-depot prices of Premium Motor Spirit (PMS) saw slight reductions across key Nigerian ports, including Lagos, Calabar, and Port Harcourt. Furthermore, the landing costs of diesel and aviation fuel also dropped, with diesel falling from N1,089 per litre to N1,068.04, and aviation fuel decreasing from N1,117.34 per litre to N1,079.79.
This reduction in costs has intensified the comparison between imported petrol and that sourced from the recently commissioned Dangote refinery. Based on NNPC’s latest reports, the difference in cost may be less than N46 per litre, with the NNPC suggesting it procured Dangote’s petrol at N898 per litre.
Earlier this year, the Nigerian National Petroleum Corporation (NNPC) raised pump prices on the same day Dangote unveiled its locally-produced fuel. Petrol prices, previously hovering around N600 per litre, soared to N855 and even N900 per litre in certain regions. NNPC now predicts that petrol sourced from the Dangote refinery could sell for over N1,000 per litre in northern states such as Borno, while in Abuja, Sokoto, and Kano, prices may hover just below N1,000. In southern states like Oyo and Rivers, prices are expected to be slightly lower, with Lagos and its surrounding areas seeing the lowest price at around N950 per litre.
Despite these projected figures, reports have emerged that some major marketers in Lagos continue to sell petrol for as low as N870 per litre, even while prices elsewhere have exceeded N1,200 per litre.
During a recent media engagement, Dapo Segun, NNPC’s Executive Vice President of Downstream Operations, discussed the price negotiation between NNPC and Dangote Refinery. Segun explained that while the NNPC had reached an agreement with Dangote, the pricing of PMS remains market-driven.
“Dangote approached us with a price proposal, and we negotiated based on market alternatives. It was a process that took over a week, with counter-offers and revisions,” Segunremarked. He added that NNPC would only lift petrol from Dangote if it was more cost-effective than imported alternatives.
As the sale of petrol from the Dangote refinery to the NNPC continues, hopes are high that prices will drop further as the naira crude sale begins today, October 1, 2024. Nigerians are eager to see whether this shift will provide some much-needed relief from the soaring fuel costs that have strained households and businesses alike.
