Intense pricing competition emerged in the nation’s downstream sector on Saturday after the Nigerian National Petroleum Company Limited reduced its ex-depot price of Premium Motor Spirit, commonly referred to as petrol, to N899 per litre.
This decision, coming days after the Dangote Refinery reduced its price to N899, was confirmed by the Petroleum Products Retail Outlets Owners Association of Nigeria in a statement on Saturday.
The new price indicates a reduction of N141 or 13.56 per cent, from N1,040 per litre it sold to customers living in the Federal Capital Territory.
The statement, signed by the association’s National Public Relations Officer, Dr Joseph Obele, and quoting a document released by NNPCL’s Commercial Department, said marketers could offtake products based on the regional pricing scheme.
The document indicated that marketers would buy the product at N899 per litre in Lagos State, matching the price offered by the Dangote refinery a few days ago. Marketers purchasing from its Warri, Oghara, Port Harcourt, and Calabar depots would pay N970 per litre to offtake products.
The statement read, “The Nigerian National Petroleum Company Limited has taken a significant step in response to the competitive impact of deregulation in the downstream sector.
“The company recently reduced the ex-depot price of Premium Motor Spirit from N1,020 to N899 per litre.
“The price reduction by NNPCL is seen as a response to the competitive impact of deregulation, which has led to increased competition in the downstream sector.”
However, the NNPC spokesperson, Olufemi Soneye, declined to speak when contacted.
Marketers predict further drop
But Obele noted that the price reduction by the national oil firm was a response to the competitive impact of deregulation, which had led to increased competition in the downstream sector.
He expressed optimism that PMS prices would drop further before the end of January 2025 given the global decline in crude oil prices and the naira’s recent gain against the dollar.
Obele described the trend as a price war and emphasised that the price reduction by the Dangote refinery and the NNPCL demonstrated the benefits of competition. He advocated the immediate privatisation of government-owned refineries.
The move is expected to spark a price war among oil marketers, ultimately benefiting consumers.
In his reaction, National President of the Independent Petroleum Marketers Association of Nigeria, Abubakar Maigandi, said Nigerians would get fuel at cheaper rates once the marketers start taking the product at the reduced rate from NNPCL.
“The two most critical stakeholders in the sector have already reduced the rate, which is a very good development for us. So once we start taking fuel at the reduced rate, we are going to reduce our price too. We will also apply the price reduction percentage of the NNPCL,” he stated.
Also, the National Publicity Secretary of IPMAN, Mr Chinedu Ukadike, expressed satisfaction with the price reduction.
According to him, the price adjustment underscores the benefits of healthy competition brought about by the deregulation of the downstream sector.
“It’s a welcome development. And that is the duty of deregulation. Once the competition is held, there will be constant reduction in price of fuel,” Ukadike said.
He attributed the price drop not only to NNPCL’s readiness for the deregulated pricing regime but also to a reduction in the foreign exchange rate.
“As we continue to have multiple choices, we will also have multiple chances of continuous reduction. So IPMAN is very happy, and as we are buying the product cheaper, we will also see it cheaper to the consumers,” he added.
When asked about the potential pricing at IPMAN-affiliated filling stations following the NNPCL’s reduction, Ukadike said, “Well, we can’t fix prices based on factors of demand and supply as well as logistics. So filling stations may not have a fixed uniform price. But I can assure you that the price of the product won’t go beyond N1000, except for petrol stations in far-away Northern states whose logistics cost is enormous.”
Also, the National President of PETROAN, Billy Harry, said the price reduction would bring relief to motorists and Nigerians during the holiday season.
He said, “The reduction in PMS price by NNPCL is a demonstration of the company’s commitment to making petroleum products more affordable for Nigerians. We commend NNPCL for responding to our call for affordable PMS prices.”
He also listed the benefits of the price reduction to consumers, including reduced transportation costs.
“Increased economic activity: Lower fuel prices will stimulate economic growth by reducing production costs and increasing demand for goods and services.
“Improved standard of living: The price reduction will lead to a decrease in the cost of living, enabling Nigerians to afford necessities and enjoy a better quality of life,” he added.
Harry commended the Dangote refinery for its earlier price reduction, which he said had helped to stimulate competition in the downstream sector.
Dangote partners MRS
Meanwhile, the President of the Dangote Industries Limited, Aliko Dangote, has commended President Bola Tinubu for the positive impact of the naira-for-crude swap deal on the Nigerian economy, which has led to a reduction in prices of petroleum products in the country.
This was as the refinery announced its partnership with MRS Petrol station, to sell petrol from its retail outlets nationwide at N935 per litre.
The facility made the announcement in a statement posted on its social media handles on Saturday.
It said the partnership was to ensure that the price reduction got to the end consumer.
The statement read in part, “To provide succour to Nigerians, Dangote recently reduced the price of Premium Motor Spirit from N970 to N899.50 at its Refinery loading gantry and provided generous credit terms to marketers.
“To ensure that this price reduction gets to the end consumer, we have signed a partnership with MRS to sell petrol from its retail outlets nationwide at N935 per litre” he added.
The price reduction is said to have commenced in Lagos, and would spread nationwide from Monday.
In his statement, Dangote also called on other oil marketers, including the NNPC Retail, “to work with us to ensure that Nigerians enjoy high-quality petrol at discounted prices.”
Recall that in September, the Federal Executive Council, under the leadership of Mr President, approved the sale of crude to local refineries in naira and the corresponding purchase of petroleum products in naira.
The move, which commenced on October 1, led to reduced pressure on the dollar and ensured the stability of the local currency.