Fresh pressure is building on Nigeria’s downstream petroleum market as Dangote Petroleum Refinery yesterday resumed gantry loading of Premium Motor Spirit (PMS) in naira after a week-long suspension, but simultaneously raised its ex-depot price by N140 to N1,215 per litre, a move expected to trigger another round of pump price adjustments across the country.
The hike, representing a 13.02% jump from the previous N1,075 per litre, comes barely one week after the refinery suspended truck loading and temporarily switched to dollar-denominated sales, a decision that disrupted supply, pushed marketers to private depots and drove ex-depot prices above N1,300 per litre, reports The Guardian.
A notice issued to customers and obtained by our correspondent confirmed that gantry loading had resumed under a revised naira pricing template, with all outstanding truck-loading volumes repriced at N1,215 per litre with immediate effect.
The refinery increased gantry price from N1,075 per litre to N1,215 per litre, representing an increase of N140 per litre.
The notice informed customers that the revised gantry and coastal prices took immediate effect, adding that all unloaded gantry volumes would be repriced at the new rate.
Although the return to naira transactions is expected to ease supply bottlenecks, the new ex-depot price is expected to cascade through distribution chain, with marketers likely to pass extra cost to consumers through retail prices.
The refinery had resumed coastal loading a day earlier, increasing its coastal PMS price to $1,161.23 per metric tonne from $1,044.62/MT, an increase of 11.2 per cent.
The latest development effectively ends the uncertainty created by the refinery’s brief dollar-pricing regime. However, it also signals that motorists may not be spared another increase at filling stations as marketers begin to factor the new loading cost, transportation expenses and operating margins into retail prices.
Speaking with our correspondent, the National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Shettima Maigandi, welcomed the refinery’s decision to return to naira transactions, saying it had restored certainty to the domestic market after days of supply disruptions.
Maigandi said although the new ex-depot price was higher than the previous rate, it remained lower than what independent marketers were forced to pay after Dangote halted loading.
“Considering what is happening globally because of the Middle East crisis, the price is reasonable. When Dangote stopped selling, we were buying petrol from private depots at about N1,300 per litre. Now it is N1,215. Compared with what we were buying, it is fair and we are happy that he has returned to naira sales,” he said.
He, however, declined to project a new pump price, noting that marketers would first determine transportation costs to their various destinations before adjusting retail prices.
In contrast, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) said while the refinery’s return to naira sales was expected and welcome, the latest increase had once again exposed the growing pricing influence of a dominant supplier in the deregulated market.
Speaking, PETROAN National President Billy Gillis-Harry said the refinery’s earlier decision to migrate to dollar sales was unsustainable, making its return to Naira “the common-sense business thing to do.”
He warned, however, that unless the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Federal Competition and Consumer Protection Commission (FCCPC) ensure effective competition in the downstream sector, the market would remain vulnerable to unilateral price adjustments.
“Until the NMDPRA and the FCCPC rise up to implement and enforce market-reflective pricing, we will continue to have this kind of situation where one dominant player will, at will, fix prices, jack them up and jack them down,” Gillis-Harry said.
He added that Nigeria needed more refining capacity from facilities such as the Port Harcourt, Warri and Kaduna refineries to deepen competition and stabilise domestic fuel prices.
The refinery had last week suspended both coastal and gantry loading after introducing a dollar-denominated pricing template, citing difficulties in sourcing sufficient crude oil under the Federal Government’s naira-for-crude arrangement.
The suspension tightened product availability across the downstream sector and forced marketers to source supplies from private depots, where ex-depot prices rose by about N200 per litre to roughly N1,275, reflecting increased replacement costs.
