The decision by Dangote Petroleum Refinery to reduce the ex-depot price of Premium Motor Spirit (PMS) has come with significant implications for petroleum marketers,
Industry stakeholders revealed that the sudden price reduction, announced Saturday night, may have been prompted by threats from some traders to begin importing fuel due to the lower cost of foreign PMS compared to locally refined products.
Effective immediately, Dangote Refinery reduced its price from ₦950 to ₦890 per litre.
“In a bid to provide economic relief for Nigerians, Dangote Petroleum Refinery has adjusted the ex-depot price of PMS to ₦890 per litre. This reflects favourable global energy trends and declining international crude oil prices,” explained Anthony Chiejina, Chief Branding and Communications Officer of the Group.
The company emphasized that the price cut aims to benefit Nigerian consumers and urged marketers nationwide to ensure these savings reach the public.
Mixed Reactions from Marketers
While the price reduction is expected to lower the cost of petrol across Nigeria and positively impact the economy, marketers face challenges. Those who purchased stock shortly before the announcement risk incurring losses by selling below cost.
Hammed Fashola, Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), acknowledged the dual impact: “Marketers who bought products at the previous price may incur losses, but this is part of deregulation. We must be cautious about where and when we purchase products.”
Fashola added that competitive market forces leave marketers with no choice but to lower prices quickly to stay relevant: “If competitors source their products at the new price, older stocks must be sold at a loss to attract buyers.”
Competitive Pressures Driving Changes
The reduction comes amid warnings from some importers that foreign PMS was undercutting Dangote’s pricing. The move appears to be a response to maintain market competitiveness, said Fashola: “If imported PMS is cheaper, Dangote must adjust. This is the beauty of competition.”
Sector-wide Implications
Billy Gillis-Harry, President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), welcomed the price cut, noting its potential to alleviate economic hardships.
“The reduced ex-depot price will benefit citizens and the broader economy. Lower petrol costs mean reduced transportation expenses, which can lower the cost of goods and services,” he said.
Gillis-Harry expects other players, including the Nigerian National Petroleum Company Limited (NNPC), to follow suit to remain competitive.
Economic Benefits for Nigerians
The reduction is projected to boost economic activity, as lower transportation costs could increase demand for goods and services, easing inflationary pressures.
Chinedu Ukadike, IPMAN’s National Publicity Secretary, highlighted similar impacts when Dangote entered the market in 2024 and reduced diesel prices, forcing marketers to sell at a loss.
The recent developments underscore the dynamics of a deregulated market, where competition shapes pricing and benefits consumers.
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