Marketers Ignore Dangote’s Petrol Price Reduction, Maintain High Pump Rates

Despite the recent reduction in ex-depot petrol prices by the Dangote Petroleum Refinery, many independent marketers have refused to lower their pump prices. They argue that doing so would lead to significant financial losses, especially since many of them are still selling off petrol purchased at higher rates.

Speaking with The PUNCH on Tuesday, several marketers explained that they could not reduce prices at the pump until they finish selling stocks bought at prices close to N900 per litre. On Monday, The PUNCH reported that Dangote Refinery had slashed its ex-depot price from N880 to N840 per litre, a change confirmed by Dangote Group’s spokesperson, Anthony Chiejina. He stated that the new pricing took effect on June 30.

The Dangote refinery had earlier raised its prices to N880 per litre during heightened geopolitical tension between Israel and Iran, a period that saw global crude prices surge to nearly $80 per barrel.

Marketers had anticipated a price shift starting Monday, and by Tuesday, other depot owners and importers had adjusted their rates to reflect the recent fall in crude prices, which followed a ceasefire between Israel and Iran. The average depot price dropped from N920 to around N845 per litre.

According to data from Petroleumprice.ng, depots such as RainOil, Pinnacle, Matrix, Emadeb, Wosbab, and First Royal were selling petrol at N845 per litre in Lagos, while NIPCO, Aipec, and Integrated priced theirs at N850. In places like Warri and Port Harcourt, the average rate hovered around N860.

However, despite a N40 reduction from Dangote’s gantry price, many filling stations did not follow suit. Retailers affiliated with Dangote, including MRS, Heyden, and AP, have yet to implement any price changes, and this has influenced other marketers to keep their pump prices unchanged. On Tuesday, pump prices remained between N920 and N935 per litre in Ogun State and other areas in the South West.

Filling stations operated by the Nigerian National Petroleum Company Limited also maintained previous rates, with petrol sold at N915 in Lagos and N925 in Ogun. Experts estimate that with Dangote’s N840 ex-depot rate, pump prices should drop to around N890 per litre or less.

Billy Gillis-Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria, said pump prices remain high because many retailers are still selling older, more expensive stock. When asked about the stagnant pump prices despite the drop in depot prices, Gillis-Harry responded that retailers could not afford to incur massive losses.

He explained that if a marketer bought fuel at N920 and prices fell to N840, selling at the new rate would result in a loss of N80 per litre. With a 45,000-litre truck, that loss would be unsustainable.

He insisted that existing stock must be cleared before any reduction in prices can occur. Retailers cannot restock if they sell at a loss, which would hurt their operations. Gillis-Harry acknowledged that competition might create pressure on marketers, especially when others with newly purchased stock begin selling at lower rates. This, he said, is part of the natural flow of the market.

He also voiced concerns about the frequency of price fluctuations, suggesting that there should be some regulation to manage the volatility. He recalled a previous appeal by PETROAN to the Nigerian Midstream and Downstream Petroleum Regulatory Authority, urging the adoption of a six-month price stability policy. The association believes this would allow marketers to plan better and avoid losses linked to rapid price changes.

Gillis-Harry further advised that the Nigerian National Petroleum Company Limited should increase crude oil supply to local refineries to support consistent production.

Recently, major fuel distributors, including Dangote and NNPC, increased petrol prices following a surge in international crude oil prices. Pump prices had risen to between N915 and N955, depending on the region, after sitting below N900 before the adjustment. In northern Nigeria, the cost reportedly reached as high as N960 to N980 due to transportation costs and distance.

Crude prices, however, have since dropped, following the ceasefire between Israel and Iran, which eased fears of disruptions in Middle East oil supply. Brent crude was trading at about $67 per barrel and West Texas Intermediate at $65 on Tuesday, both having dipped as low as $63 and $65 over the weekend. These figures are a notable decline from previous levels of $77 and $73, according to Oilprice.com.

Eche Idoko, spokesperson for the Crude Oil Refinery Owners Association of Nigeria, explained that many marketers are still selling older stock. He noted that prices should begin to drop within one to two weeks if crude prices remain stable.

Earlier in June, MRS raised its pump price to N925 per litre in Lagos from N885, following a price hike at Dangote’s refinery from N825 to N880. Since then, MRS has been selling petrol at N955 in the South East and N935 in states such as Ogun, Oyo, Ondo, Osun, and Ekiti. Customers in the North East and North West have also been paying between N945 and N955 per litre.

Analysts have questioned why Dangote did not revert its gantry price to N825, the previous rate before the hike, instead of settling at N840 per litre.