DESPITE the ex-depot petrol price reduction by the Dangote Petroleum Refinery on Monday, many marketers have refused to adjust their pump prices, saying they could run into losses.
The marketers who spoke with this newspaper on Tuesday stated that dropping their pump prices would not be possible unless they exhaust the product purchased at prices around N900 per litre.
This newspaper reported late on Monday that the Dangote refinery had reduced the ex-depot petrol price from N880 to N840 per litre. The spokesman of the Dangote Group, Anthony Chiejina, confirmed this to our correspondent.
Chiejina stated that the price reduction took effect on June 30. “PMS price has been reduced from N880 to N840 per litre effective 30th June,” he said.
This newspaper recalls that the Dangote refinery jerked up the price of petrol to N880 as tension escalated during the 12-day conflict between Israel and Iran, raising the price of crude oil to almost $80 per barrel.
Marketers had on Sunday anticipated that there would be a new price regime from Monday. As of Tuesday, our correspondent observed that other depot owners and importers adjusted their prices to reflect the new price regime occasioned by the drop in crude prices following the ceasefire between Israel and Iran.
Down from N920, most of the depots dropped their gantry prices to an average of N845 a litre. According to Petroleumprice.ng, RainOil, Pinnacle, Matrix, Emadeb, Wosbab and First Royal were selling petrol at N845 in Lagos on Tuesday.
Similarly, NIPCO, Aipec and integrated sold premium motor spirit at N850 per litre. In other depots outside Lagos, such as Warri and Port Harcourt, the product was sold at an average of N860.
As the Dangote refinery removed N40 from its gantry price, Nigerians expected that this would be replicated by filling stations but the checks by our correspondent showed yesterday that the price remained the same.
As Dangote partners such as MRS, Heyden and AP have yet to call the shots, it is observed that other filling stations may not change their pump prices. Filling stations dispensed petrol at an average of N920 to N935 in Ogun and other parts of the South West yesterday.
Retail outlets owned by the Nigerian National Petroleum Company Limited have also yet to change their pump prices as of the time of filing this report. NNPC stations sold petrol at N915 in Lagos and N925 in Ogun State.
Experts observed that the pump price of PMS should shrink to N890 or less with Dangote’s N840 gantry price. However, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, said prices have yet to come down because traders were still grappling with old stocks.
When told that the filling stations’ prices were not coming down despite the drop in the ex-depot prices, Gillis-Harry replied, “How will it come down? How will the price come down at the pump? If you, as a Nigerian businessman, bought fuel at N920 and the price came down to N840, what would you do with the change? Multiply N80 by 45,000 litres, how much is that? So, are you going to throw that away? No, that’s not possible,”
The PETROAN president stated that there may not be an immediate price cut until the existing fuel in filling stations was exhausted. According to him, a retailer who loses about N100 per litre from a 45,000-litre stock would not be able to restock.
“We need to exhaust existing stocks. All existing stocks must be sold out first. That is the right business thing to do because if a retail outlet owner loses N100 per litre, and he has to go back to the market to restock, he won’t be able to restock,” he stated.
Gillis-Harry, however, noted that there could be challenges and the pressure to cut prices below cost when those who get the stocks at the new price divert customers from those selling at the old price.
“The only challenge is that there will be retail outlets that will be selling cheaper because maybe they just bought it fresh, and they need to sell it. So, everybody will be waiting for that. That’s how it functions,” he added.
Again, Gillis-Harry expressed concerns over the frequent price changes, saying this must be checked. “These changes in prices need to be checked; they need to be justified. That’s how it works,” he stressed.
Recall that the PETROAN once called on the Nigerian Midstream and Downstream Petroleum Regulatory Authority to adopt a six-month price stability period to prevent losses. The association argued that this would prevent losses, as Dangote refinery and others would have to wait for six months before a price change.