The Dangote Petroleum Refinery’s decision to reduce the ex-depot price of Premium Motor Spirit (PMS) from ₦950 to ₦890 per litre has come at a significant cost to petroleum marketers.
Some marketers believe the price cut was a strategic response to warnings from traders who were considering importing cheaper foreign PMS due to its lower cost compared to locally refined products.
In a statement, Dangote Group‘s Chief Branding and Communications Officer, Anthony Chiejina, explained that the decision was made in response to global energy market trends and a decline in international crude oil prices.
He also emphasized that the price adjustment aims to ensure that Nigerian consumers benefit from changes in global crude prices.
The company has urged marketers to pass on the benefits of the reduction to the public.
While the price reduction is welcomed by consumers, marketers who purchased fuel before the price drop are now forced to sell at a loss, potentially incurring millions of naira in debts.
Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Hammed Fashola, acknowledged the pros and cons of the situation.
He stated: “For instance, a marketer who purchased stock on Friday likely hasn’t sold it all before the price drop. That’s the downside. But, we have to live with it—that’s the beauty of deregulation.”
He noted that competition would force marketers to lower prices, even if they initially bought at higher rates.
“If you don’t reduce your price, nearby marketers who buy at the new rate will. Within days, you’ll have no buyers unless you adjust,” Fashola explained to The PUNCH.
He also dismissed the idea of stakeholder consultations before price adjustments, stating that in a competitive market, price fluctuations are inevitable.
Fashola suggested that the price cut was a direct response to threats by importers who claimed foreign PMS was cheaper than Dangote’s refined fuel.
“If Dangote had not reduced prices, imported fuel would have dominated the market. The reality is, businesses must respond to market forces. It’s good for the sector and, ultimately, for the public,” he noted.
He also emphasized that locally refined PMS should logically be cheaper than imported fuel since Dangote sources crude in naira, eliminating foreign exchange constraints and transportation costs.
NNPC Expected to Follow Suit
With Dangote Refinery lowering its price, analysts predict that the Nigerian National Petroleum Company (NNPC) Limited will also have to adjust its pricing to remain competitive.
“If NNPC doesn’t cut prices, who will buy from them? They have to respond to market realities,” Fashola added.
Confirming this possibility, National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, stated that NNPC might soon adjust its price due to competitive pressure.
“The Dangote refinery’s decision benefits citizens and the economy. Reduced fuel costs will ease Nigerians’ financial burden, lower transportation expenses, and stimulate economic activity,” Gillis-Harry said.
Impact on the Economy
Economic analysts believe that the drop in fuel prices could have positive ripple effects: Lower transportation costs, reducing the price of goods and services; Increased consumer purchasing power, freeing up income for essential needs; Boosted economic activity, as businesses can operate with reduced logistics costs; Potential reduction in inflation, as fuel price drops influence overall cost-of-living trends.
Marketers Struggling with Financial Losses
Despite the potential long-term benefits, petroleum marketers face immediate losses, as they are forced to sell below cost.
IPMAN National Publicity Secretary, Chinedu Ukadike, recalled that when Dangote Refinery entered the market in early 2024, it crashed diesel prices, leaving marketers with unsellable high-cost stock.
“This is why marketers fear lifting fuel now. Price instability can lead to collateral losses, especially for those who took loans to finance bulk purchases,” Ukadike explained.
He noted that during previous price crashes, marketers received no compensation, forcing them to sell at a loss.
“No one repays marketers for their losses when prices drop. It’s the nature of the business, and we have to adapt,” he stated.
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