In spite of the drop in the landing costs of premium motor spirit (PMS), the price of petrol remains high, the Major Energy Marketers Association of Nigeria (MEMAN) has claimed.
In its latest Daily Energy Bulletin, dated November 8, 2024, the group stated that in the last three months, landing costs of petrol dropped to N971.57 per litre representing a 20.34 per cent decrease.
He noted that the way things stand, Nigerians would benefit minimally from the Dangote Refinery because they also purchase crude from the NNPCL.
The reduction in landing costs reflects global market fluctuations and supply chain adjustments.
Despite this decline, petrol prices in Nigeria have risen, with the retail price increasing by N443 from N617 per litre on August 1, 2024, to N1, 060 per litre as of November 8, 2024.
The NNPC Ltd had been at loggerhead with the Dagote Refinery over the price differentials until the State-run oil company backed out of the deal, urging oil marketers to feel free to deal directly with Dangote refinery.
According to MEMAN data, in August 2024, oil marketers imported petrol at N1, 219 per litre based on a Brent crude oil price of $80.72 per barrel and an exchange rate of N1, 611 per dollar. During the period, it said petrol sold at N617 per litre.
However, in November, with an estimated landing cost of N971.57, a Brent crude price of $75.57 per barrel, and an exchange rate of N1,665.84 per dollar, the retail price had risen to N1,060 at the Nigerian National Petroleum Company Limited (NNPCL) stations and N1,180 at independent marketers’ stations.
The data also showed that landing costs were N945.63 in September 2024 and N903.64 in October 2024.
…Competition ‘ll drive down price
In an interview with Blueprint, an economist and development expert, Aliyu Ilias, said that until there is competition, Nigerians will not reap the benefits of low crude price.
Ilias insisted that the local refineries should function just as there is importation of the products, stressing that it will drive competition for the benefit of Nigerians.
He said: “In the oil and gas, Nigeria must be ready to also do the needful by giving room for competition. I don’t support that there should not be importation; there should be importation while we still have our local refineries. Local refineries and imported fuel will have to compete. The landing costs cannot reflect this until we give room for more competition.”
Speaking further, Ilias said: “I doubt if Nigerians will reap the benefits of the price of global oil prices coming down because of our structural problem.
“First and foremost, there must be competition. America had over 130 refineries and they still import fuel. Saudi Arabia has about five refineries they still import; it shows there must be room for competition. Until there is a competition, that is when we can have a better deal, however, two things will determine the oil price, one is forex.
“On the forex side, we are at the negative end simply because a dollar is about 1,700. So, how do we really benefit? And two, what is oil price globally. And until Nigeria is ready to actually do business by allowing competition, the situation will not improve.”
‘…Long night for Nigerians’
Also, a business affairs analyst, Anthony Aku, in a telephone interview told Blueprint that the pump price of petrol is not going to come down any time soon.
According to him, it would be false to think that with Dangote Refinery fully operational the prices of fuel would drop.
He said: “The price that NNPCL sells to Dangote Refinery is what it is going to sell to Nigerians.
“Personally, it is still a long night for Nigerians as the increase in the pump price of petrol is not going to abate soon.
“Whether the international price of crude oil drops or not, it does not matter especially in Nigeria. The price has been pegged so, it’s not easy for them to bring down the price even though they say market forces should drive the market.”
..Marketers exploiting Nigerians – NLC
But the Nigeria Labour Congress (NLC) is accusing oil marketers of exploiting Nigerians by inflating petrol prices well above the actual market value.
In a communiqué released after its National Executive Committee (NEC) meeting, the congress said the continuous increase in petrol prices was worsening the economic hardships caused by government policies.
The exploitation by oil marketers of Nigerians, they said, was happening despite citizens facing increased suffering and hunger.
“The NEC-in-session noted with increasing dismay the shenanigans around the appropriate pricing of petrol (PMS) in Nigeria. It observed that there may be a gang up against Nigerians by fat cats in the industry as the current price of the product is significantly higher than the real market price.
“Padding of costs and abnormal margins seems to be the order of the day considering the revelations from the ongoing controversy between Marketers and Dangote group. It is entirely possible that Nigerian workers and masses are being ripped off by those who control the levers of Economic power in Nigeria which explains why the domestic public refineries may not immediately be allowed to come on stream.
“NLC demands appropriate pricing of petrol and calls for the public domestic refineries in PH, Warri and Kaduna to quickly come back on stream to break-up the monopolistic stranglehold the big players have on the industry,” it said.