Petrol Hits N1,400 As Dangote Defends Three Price Hikes In Eight Days
The Dangote Petroleum Refinery has defended its latest petrol price increases amid public outrage, as Premium Motor Spirit, PMS, now sells between N1,310 and N1,400 per litre across the country.
Petrol is currently selling for about N1,310 per litre in Lagos and Ogun States, while the price has risen to N1,350 and above in northern states and other locations far from the refinery. In some areas, the product is now approaching N1,400 per litre.
The latest surge followed the refinery’s decision to raise its PMS gantry price by N65 per litre, from N1,200 to N1,265, effective August 29. It was the third increase announced by the refinery in eight days.
The refinery first increased its gantry price from N1,165 to N1,185 per litre on August 21. Five days later, it raised the price by another N15 to N1,200 per litre, effective August 26, before the latest N65 hike to N1,265.
The three adjustments have raised Dangote’s gantry price by N100 per litre in eight days, representing an increase of about 8.6 percent, moving its coastal PMS price from N1,582,380 to N1,669,545 per metric tonne.
The hikes came even as global crude prices declined. Brent crude closed at $88 per barrel and WTI at $83 on Friday, a 5 percent drop, according to Oilprice.com.
A senior executive of the Dangote refinery, who spoke on condition of anonymity, said the prevailing international crude price cannot be the sole determinant of petrol price because of the time lag between crude purchase and delivery.
“If you want to buy crude at today’s price, when do you think you will complete the actual transaction to purchase the crude? When will you get a laycan? When can you get a ship chartered? When will the ship go to load the crude and secure the laycan for discharge? When is the sailing time before the crude eventually gets into your tank?” he queried.
He explained that large volumes of crude purchased earlier at higher prices are still in storage, and selling products refined from expensive inventory at a price based on cheaper replacement crude would be unsustainable.
The explanation comes despite data showing Dangote’s price was competitive earlier. According to the Major Energies Marketers Association of Nigeria’s Energy Bulletin for August 27, Dangote’s N1,200 gantry price was N22.32 below the spot import-parity price of N1,222.32 per litre. However, two days later, the new N1,265 price put it N42.68 above that import-parity estimate.
Reuters reported on August 26 that between 30 and 40 percent of the refinery’s crude feedstock is imported, further exposing it to global market volatility and shipping costs.
Marketers have warned that the volatility is disrupting business planning.
The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, IPMAN, Chinedu Ukadike, said marketers are facing challenges from market volatility, government policies, international market dynamics and exchange rates.
“We are not refiners to be able to determine the price of petroleum products. It is going to be too difficult for us to structure our business,” Ukadike said, while acknowledging that Dangote had previously reduced prices in line with international trends.
He warned that continued tensions between Iran and the United States could worsen price irregularities.
“The more the Iran and United States crisis continues to persist, the more we’ll be having these irregularities in price,” he said.
The difference in pump prices across locations is partly due to transportation costs from coastal refineries and depots to distant markets, a challenge Dangote says it plans to address by extending its free distribution scheme nationwide.
The development comes amid a renewed subsidy debate, as former Vice President Atiku Abubakar, presidential candidate of the African Democratic Congress, said he would reintroduce fuel subsidies to reduce hardship and cost of living.
