THE decision by the Dangote Petroleum Refinery to reduce the ex-depot price of Premium Motor Spirit (petrol) on Saturday night came at huge costs to many petroleum marketers.
Marketers who spoke to our correspondent said the sudden price reduction by the Dangote refinery must have been occasioned by the recent warnings that some traders were planning to resort to importation if the foreign PMS remains cheaper than the ex-depot prices of locally refined products.
On Saturday night, the 650,000-capacity refinery told Nigerians that it had reduced its price from N950 to N890 per litre.
“In a bold move to drive economic relief for Nigerians, Dangote Petroleum Refinery has reduced the ex-depot price of Premium Motor Spirit, commonly known as petrol, from N950 to N890 per litre, effective from Saturday.
“This price adjustment is in response to favourable developments in the global energy sector and a significant decline in international crude oil prices. Dangote refinery’s decision reflects its commitment to aligning with market realities and ensuring that consumers benefit from changes in international crude oil prices,” a statement by the Group’s Chief Branding and Communications Officer, Anthony Chiejina, said.
The statement also noted that the price reduction would significantly lower the cost of petrol across the country, generating a positive ripple effect throughout the broader economy.
The refinery has also called on marketers across the country to ensure that the benefits of the reduced price are passed on to the Nigerian public.
However, marketers said the price reduction has both positive and negative effects on their business.
It was learned that some marketers who bought the product a few hours before the announcement would be forced to sell below the cost, incurring debts running into millions of naira.
In an interview with our correspondent, the Vice President of the Independent Petroleum Marketers Association of Nigeria, Hammed Fashola, said the price reduction is a good development but it will surely affect business in negative and positive ways.
Speaking about the negative effect of the reduction, Fashola said, “For instance, maybe a marketer purchased some product on Friday. I am sure the marketer would not have sold it before the new reduction happened. That is the negative aspect of it. But, we have to abide by it. We have to live with it. That is the beauty of deregulation.
“So, we have to be careful when we purchase our product. Where we purchase it from and the price we are getting it. And we must have adequate information on what is going on. So that we will not be losing money every day,” Fashola noted.
He emphasised that when a price reduction happens, the only option a marketer has is to reduce the price so as to let go of old stocks, or else he would be left with no buyers.
“When this happens, the only option a marketer has is to bring down the price. Because if you don’t do that, the competition will set in.
“Some marketers in your neighbourhood might be lucky to get their product tomorrow at N890. So, if you have a N950 product with you, within two to three days, you will not have an option but to bring it down. That is the situation marketers are facing now, but we have to cope with it. It is the marketer who bears the losses,” he stated.
Asked if there is a way to carry all stakeholders along before a major price review to reduce losses, the IPMAN leader replied, “There is no way one can do that in this competitive environment that we find ourselves in now. It is a competition.”
He recalled that some importers have recently threatened to boycott locally refined petroleum products because the imported ones were cheaper, saying Dangote refinery has reacted to that.
“Some marketers and importers were threatening that an imported PMS is much cheaper than a Dangote PMS. So, Dangote is reacting to this with the price reduction. That is the beauty of competition. There is nothing anybody can do about that. You want to sell and I want to sell. I think it is good for the sector.
“It is the public that will gain more because, by this, they will be getting cheaper fuel, which is good. That is what we have been pushing for. It has come. We don’t have to complain,” Fashola maintained.
Asked to speak more on Dangote reacting to the threat to import cheaper fuel, he said, “Of course, Dangote has to react to it. If it doesn’t react this way, if the imported one is cheaper, what will happen? Look at the investment there.