Dangote Petroleum Refinery’s recent cut in the gantry price of Premium Motor Spirit (petrol) has plunged the fuel market into a full-scale price war. The move has inflicted heavy losses on fuel importers, depot operators, and retail marketers, even as the refinery itself acknowledges significant financial strain. Re
ports show that petrol importers could be losing up to N102.48 billion monthly after Dangote reduced its gantry price from N828 per litre to N699, underscoring the fierce competition transforming Nigeria’s downstream petroleum sector.
Simultaneously, the refinery is expected to face a monthly loss of roughly N91 billion due to the price reduction, highlighting the fierce competition transforming Nigeria’s downstream oil sector.
While many Nigerians have hailed the petrol price cut as a welcome relief, particularly during the Yuletide season, fuel marketers operating filling stations nationwide report substantial losses, as they are compelled to sell stocks previously purchased at higher prices for less than cost.
The move has highlighted underlying tensions in the deregulated petroleum market, creating both winners and losers almost immediately.
According to reports, the Dangote Refinery announced a N129 per litre reduction in its petrol gantry price on Friday, lowering the ex-depot rate from N828 to N699 per litre.
Just days after assuring Nigerians of an adequate fuel supply to prevent long queues at filling stations during the festive season, the refinery announced a 10-day credit facility for marketers, noting that the new price regime took effect from December 12.
At a Sunday press briefing, the Dangote Group vowed strict enforcement of the new pricing, directing that petrol must be sold at N739 per litre nationwide starting Tuesday.
MRS filling stations will implement the new rate immediately, with other partner stations expected to follow suit.
To stay competitive, importers and private depot owners have been forced to cut prices to match the Dangote refinery’s rates, resulting in significant losses across the supply chain.
Market checks using data from Petroleumprice.ng indicate that private petroleum depots in Lagos reduced PMS prices by roughly 14 percent within days of Dangote’s announcement.
Several major depots in the city were selling PMS at N710 per litre, down from an average of N828 per litre just a week earlier.
Meanwhile, Dangote-affiliate marketers offered PMS at around N703 per litre, compelling neighboring depots to adjust their prices to prevent weak sales and stockpile build-up.
PMS prices have seen significant reductions across private depots in Lagos.
MENJ Depot lowered its rate from N828 per litre on December 8 to N710 per litre by December 15, a N118 drop. Integrated and Bovas depots also cut prices from N826 to N710 per litre, a N116 reduction.
The steepest fall occurred at A.A. Rano Depot, where prices dropped from N829 to N710 per litre, amounting to a N119 decrease.
Premium Motor Spirit (PMS) prices varied across major depots, with Dangote Depot selling at N702.5 per litre, while Pinnacle Depot offered PMS at N710 per litre.
Matrix and Rainoil depots priced PMS at N800 and N803 per litre, respectively, as Menu and Bovas depots aligned theirs at N710 per litre.
Automotive Gas Oil (AGO) and Liquefied Petroleum Gas (LPG) supplies also saw differing rates, with Dangote Depot selling AGO at N916 and LPG at N815.
In the AGO segment, NIPCO and Ibachem sold at N930 per litre, Duport at N944, African Terminal and Gulf Treasure at N944, while Bono Depot recorded the highest price at N945 per litre.
The recent price adjustments across Lagos depots translated to an average reduction of about 14 per cent, largely fueled by the competitive pricing strategy of the Dangote refinery.
The losses Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority indicate that the country consumes roughly 50 million litres of petrol daily, amounting to approximately 1.5 billion litres each month.
The Dangote refinery contributes approximately 23.52 million litres of fuel daily, totaling 705.6 million litres each month, while fuel importers supply the remaining 26.48 million litres per day, equivalent to 794.4 million litres monthly.
According to the Major Energies Marketers Association of Nigeria, the landing cost of petrol was N828 per litre as of December 12.
This made importers’ ex-depot prices roughly N129 higher than the rate set by Dangote Refinery. Analysts note that competitive pressure could compel depot owners to match Dangote’s pricing, potentially leading to a loss of N129 for each litre sold.
Based on consumption data, this could translate to daily losses of about N3.41 billion and monthly losses of around N102.48 billion for importers.
Similarly, with Dangote Refinery supplying 705.6 million litres of petrol monthly, the N129 reduction could result in the refinery incurring a monthly loss of approximately N91.02 billion.
Chinedu Ukadike, spokesman for the Independent Petroleum Marketers Association of Nigeria (IPMAN), described a challenging situation for fuel importers, especially those with cargoes still on the waterways.
He noted that many importers had yet to discharge their petrol shipments and expressed uncertainty about how they would cope with the current market conditions. “For importers, I wish them good luck because most of them who have imported petrol and whose cargoes are still on the waterways have not been discharged.
I don’t know how they are going to manage it this time around. But I wish them good luck, and I will also recommend high blood pressure medicines for them,” Ukadike said.
Ukadike disclosed that filling stations could lose over N80bn as they would be compelled to sell existing stocks below cost once cheaper products flood the market.
While commending Dangote for slashing petrol prices and congratulating Nigerians for enjoying the benefits of local refining and deregulation, he said marketers had begun counting their losses.
“It is a welcome development. We marketers have since been anticipating that since crude prices and the exchange rate are stabilising, we should also gain meaningfully from the Dangote refinery as the largest producer of petroleum products in Nigeria, and it has come to pass,” he said.
Ukadike noted that marketers who purchased petrol at roughly N828 per litre would face significant losses once the new, lower-priced product begins to circulate in the market.