Reported by Simon Daniel Yusuph l Journalist at Weng Global
Motorists and commuters in Abuja have expressed frustration over the slow reduction in petrol pump prices after Dangote Petroleum Refinery cut its petrol gantry price by ₦25 per litre.
The refinery reduced its petrol price from ₦1,350 to ₦1,325 per litre, raising expectations among consumers that the reduction would quickly reflect at filling stations and bring relief to motorists facing higher transport and household costs.
However, reports from the Federal Capital Territory indicate that several filling stations had yet to fully pass the latest reduction on to consumers, with petrol prices in some locations remaining above the new refinery benchmark.
Dangote cuts petrol price by ₦25
Dangote Petroleum Refinery announced the latest reduction after petrol prices had risen sharply during the preceding weeks.
The refinery’s previous increase had taken its gantry price to ₦1,350 per litre, following a series of adjustments linked largely to movements in international crude oil prices.
The latest ₦25 reduction brings the refinery’s price to ₦1,325 per litre. The adjustment is significant for consumers because the ex-depot or gantry price is one of the major cost components considered by marketers when determining retail pump prices.
Current market data indicate that petrol depot prices have begun moving lower in some locations, although pump prices remain dependent on when individual marketers purchased their existing stocks, transportation costs and other operating expenses.
Motorists want faster relief
Motorists and commuters in Abuja have questioned why the reduction at the refinery has not immediately translated into comparable reductions at all retail outlets.
Some consumers have been paying more than ₦1,400 per litre at certain filling stations in recent days, following the earlier increase in wholesale prices.
A report by the International Centre for Investigative Reporting on September 17 quoted motorists in the FCT who said they were buying petrol at around ₦1,430 per litre and struggling with the wider effect of rising fuel costs.
The complaints extend beyond the cost of filling vehicle tanks. Higher petrol prices have contributed to increased transport fares and operating expenses for businesses and commercial transport operators.
For commuters who rely on buses, taxis and other petrol-powered vehicles, changes in fuel prices can quickly affect daily transportation expenses.
Why pump prices do not change immediately
The relationship between refinery prices and retail pump prices is not always immediate.
Marketers may still have fuel purchased at an earlier, higher price. Reducing the retail price before selling existing stock could therefore reduce their margins or expose them to losses.
Dangote Refinery has previously explained that the crude used in its production is purchased under commercial arrangements that do not necessarily reflect the latest spot-market price.
The refinery has said crude is generally purchased weeks or months before processing, meaning a fall in international crude prices does not automatically translate into an immediate reduction in the cost of every batch of petrol leaving the refinery.
This creates a time lag between movements in global oil prices, refinery costs, wholesale prices and the amount ultimately paid by consumers.
Petrol prices had risen sharply
The latest reduction follows a period of significant increases in Nigeria’s downstream petroleum market.
Dangote Refinery raised its petrol gantry price from ₦1,265 to ₦1,350 per litre in September, an ₦85 increase.
The adjustment contributed to higher pump prices in Abuja and other parts of the country. Checks reported by the News Agency of Nigeria showed several filling stations in the FCT selling petrol at prices ranging from about ₦1,395 to ₦1,450 per litre.
The increases came as international crude prices rose sharply amid geopolitical tensions affecting global oil markets.
Reuters reported on September 21 that petrol prices had reached about ₦1,400 per litre in Lagos and Abuja and as high as ₦1,500 in parts of northern Nigeria. The report linked the increase to higher global oil prices and noted that Dangote Refinery’s wholesale price had also risen in response to higher crude costs.
Transport costs remain a major concern
The effect of petrol prices is particularly significant in Nigeria because road transportation is central to the movement of people and goods.
When fuel becomes more expensive, commercial transport operators face higher operating costs. These costs can be reflected in fares, although the extent and timing of any adjustment varies from one route and operator to another.
Higher transportation expenses can also affect the cost of moving agricultural produce, manufactured goods and other commodities from producers and distributors to consumers.
This means that the impact of petrol prices can extend beyond motorists to households and businesses that do not directly purchase large quantities of fuel.
Recent reports from Abuja found motorists and commuters complaining that the earlier petrol increases were putting additional pressure on household budgets.
Market competition remains important
Nigeria’s downstream petroleum market has undergone significant changes as domestic refining capacity expands.
The Dangote Petroleum Refinery, located in Lagos, currently has a crude-processing capacity of up to 700,000 barrels per day, according to the refinery. Its growing role in domestic fuel supply has reduced Nigeria’s historical reliance on imported refined petroleum products.
The refinery says its operations are intended to strengthen domestic energy security and support the country’s transition from dependence on imported refined products to greater local production.
At the same time, the downstream market remains influenced by competition among domestic refiners, importers, depots and retail marketers.
NNPC and private marketers continue to determine retail prices according to their supply costs and prevailing market conditions.
The Federal Government has maintained that Nigeria’s downstream petroleum market operates under deregulated, market-based pricing. This means changes in international crude prices and domestic supply costs can influence pump prices.
Consumers await the impact of the latest cut
The central question for motorists is how quickly the ₦25 reduction will reach filling stations.
A reduction at the refinery does not necessarily mean every filling station will immediately reduce its price by the same amount. Retail prices can vary according to location, supply arrangements, transportation expenses, existing inventory and the cost at which a marketer obtained its stock.
Nevertheless, sustained reductions in wholesale prices would normally increase pressure on retailers to adjust their pump prices as cheaper supplies replace more expensive inventory.
The current situation therefore places attention on how marketers respond to the latest Dangote adjustment and whether the reduction will spread more widely across the retail market.
What happens next
Motorists and commuters are expected to continue monitoring filling-station prices as marketers purchase and distribute petrol supplied at the new ₦1,325-per-litre refinery price.
The speed at which consumers receive relief will depend on the movement of wholesale prices, the cost of crude oil, exchange-rate conditions, logistics expenses and competition among fuel suppliers.
For Nigerian households and businesses already dealing with high transportation and operating costs, sustained reductions in petrol prices could eventually provide some relief if they are reflected consistently across the retail market.
For now, the latest ₦25 reduction represents a change at the refinery level, while the extent to which it translates into lower pump prices remains dependent on downstream market adjustments.
Weng Global – Stories beyond borders
Sources
- Dangote Petroleum Refinery
- Reuters
- News Agency of Nigeria (NAN)
- International Centre for Investigative Reporting (ICIR)
- Nigerian Tribune
- Daily Times Nigeria
- PetroleumPriceNG
