Petrol nears ₦1,400 as Dangote defends latest price increase
Dangote says the higher price reflects the cost of crude bought earlier, as petrol sells above ₦1,300 in several parts of the country.
The price of petrol is nearing ₦1,400 per litre in parts of Nigeria following another increase by the Dangote Petroleum Refinery, which has defended the latest adjustment despite a recent decline in international crude oil prices.
Petrol is currently selling for about ₦1,310 per litre in Lagos and Ogun states, while prices have risen to ₦1,350 or more in northern states and other areas farther from the refinery. In some locations, the product is approaching ₦1,400 per litre.
The latest increase followed Dangote Refinery’s decision to raise its Premium Motor Spirit gantry price from ₦1,200 to ₦1,265 per litre on August 29. It was the third increase by the refinery in eight days, taking its gantry price up by ₦100 per litre, or about 8.6 percent, since August 21.
The refinery had first increased its price from ₦1,165 to ₦1,185 per litre on August 21, before raising it to ₦1,200 on August 26. The latest adjustment also increased its coastal PMS price from ₦1,582,380 to ₦1,669,545 per metric tonne.
Dangote attributed the latest increase to the cost of crude oil already purchased for refining, arguing that changes in international crude prices do not immediately translate into changes in the cost of petrol being produced.
A senior refinery executive, who spoke anonymously because he was not authorised to speak publicly, said there was a significant time lag between purchasing crude and getting it to Nigeria.
Also Read: Dangote raises petrol price again to ₦1,200 despite crude price decline
According to the executive, crude has to be purchased, a loading window secured, a vessel chartered, and the cargo transported before it eventually reaches the refinery’s storage tanks. He also pointed to crude already held in the refinery’s inventory, saying some of it was purchased when international prices were higher.
The refinery’s position is that reducing petrol prices immediately when crude prices fall could mean selling products made from more expensive crude at prices based on cheaper replacement crude.
The explanation comes as international crude prices have recently fallen. Brent crude closed at about US$88 per barrel on Friday, while West Texas Intermediate stood at about US$83, according to Oilprice.com.
The price difference has raised questions among consumers and petroleum marketers over how quickly changes in global crude prices should reflect at the pump. Data from the Major Energies Marketers Association of Nigeria’s August 27 Energy Bulletin showed Dangote’s gantry price at ₦1,200 per litre at the time. The estimated spot import parity price was ₦1,222.32 per litre, meaning Dangote’s price was then ₦22.32 below the estimated cost of importing petrol.
Two days later, however, Dangote raised its price to ₦1,265, which was ₦42.68 above the August 27 import parity estimate. It was not immediately clear whether the import parity figure had changed after the refinery’s latest adjustment.
The impact of the increase is already being felt in the retail market, with transportation and distribution costs contributing to higher prices in areas farther from the refinery. The volatility is also creating difficulties for petroleum marketers.
Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, said fluctuations in crude prices, exchange rates and government policies were making it difficult for marketers to plan their businesses.
“We cannot, at this particular point in time, structure our business,” he said, adding that continued geopolitical tensions could lead to further price instability.
The refinery’s pricing decisions have become increasingly important to the Nigerian fuel market as it supplies a growing share of locally refined petrol. However, Reuters reported on August 26 that between 30 and 40 percent of the refinery’s crude feedstock was still being imported.
For motorists and businesses, the immediate concern is the impact of the latest increase on pump prices. With petrol already selling above ₦1,300 in several markets, further changes in refinery and distribution costs could push prices closer to ₦1,400 per litre in more parts of the country.
