Petrol Landing Cost
The landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has dropped to N981 per litre, according to data released by the Major Oil Marketers Association of Nigeria (MOMAN) on Thursday. Previously hovering around N1,130 per litre, the reduction of over N140 is due to a recent decline in global crude oil prices.
Crude oil prices and foreign exchange rates are the main fact,ors affecting the cost of refined petroleum products such as petrol, diesel, and aviation fuel. Brent crude, the global benchmark, traded above $80 per barrel in August 2024 but has fluctuated between $70 and $75 per barrel since the beginning of September. On Thursday, Brent crude was priced at $71.41 per barrel, down from $73.46 the day before.
Data from Statistica, a global statistical firm, showed that the average price of Brent crude in August 2024 was $80.36 per barrel, a decrease from the previous month due to lower demand in China and expected production increases by the Organisation of Petroleum Exporting Countries (OPEC).
Despite the drop in petrol landing costs, major oil marketers have begun importing petrol, following the Federal Government’s full deregulation of the downstream oil sector. The Nigerian National Petroleum Company Limited (NNPCL) previously held a monopoly on petrol imports, but the Dangote Petroleum Refinery has since started producing and distributing petrol locally.
On September 18, 2024, it was reported that three major oil marketers were expecting shipments of approximately 141 million litres of imported petrol. Some of these vessels have already arrived in Nigeria.
As the Dangote refinery ramps up local production of petrol, the Major Oil Marketers Association of Nigeria observed that petrol landing costs began to decline in mid-July and fell below N950 in early September, despite the rising dollar-to-naira exchange rate.
The average ex-depot price of petrol was recorded between N865 and N1,200 in Lagos, N980 and N1,400 in Calabar, and N1,200 and N1,400 in Port Harcourt. Diesel’s landing cost was reported at N1,089 per litre, and aviation fuel at N1,117.34 per litre.
The NNPCL announced it would sell Dangote-refined petrol at prices exceeding N1,000 per litre in northern Nigeria, with a peak of N1,019 per litre in Borno State. In the south, the price would be slightly lower, around N960 per litre in Oyo and Rivers States, with Lagos prices as low as N950 per litre. However, some major marketers are still selling petrol at N910 per litre in Lagos.
NNPCL officials noted that petrol pricing remains market-driven, despite agreements with Dangote Refinery. Negotiations between NNPCL and Aliko Dangote took over a week, with the goal of ensuring that Dangote’s PMS was priced competitively against imported petrol.
Nigerians are hopeful that the cost of petrol will decrease when domestic crude sales from the Dangote Refinery begin on October 1, 2024.
