As presently constituted, oil marketers in Nigeria are currently required to pay N797.66 per liter for the landing cost of fuel, despite efforts by oil merchants to buy less fuel so as to minimize losses.
Current fuel price wars in Nigeria, initiated by the Dangote Refinery, have forced independent oil marketers to run at a loss, as they have opted to cut prices to remain competitive.
Late in February, the Dangote Refinery announced a reduction of its ex-depot (gantry) price of petrol by N65, from N890 to N825 per liter.
This move sent shockwaves across the fuel market, as importers of the product noted that they were forced to adjust their prices.
This price adjustment may just continue as the latest Competency Centre daily energy data, showed that landing petrol cost dropped from N817.82 per liter to now N797.66 per liter.
The report also showed that the average cost of fuel for 30 days also dropped to N851.76 from N854.15 per liter.
Nigeria’s oil market dilemma
While the effects of the landing cost drop are uncertain, it could likely lead to another fuel price decline, which benefits Nigerian consumers, while also affecting the bottom line for those importing the product.
Analysts in the country’s energy sector argue that oil importers and marketers have been suffering huge losses as a result of the ongoing drop in PMS prices, with an average loss of N75 billion per month and N2.5 billion per day, as reported by the Punch.
With an exchange rate of N1,517.93 to the dollar, the benchmark price of Brent crude was $70.58 per barrel, down from $69.88 per barrel indicated on Friday, according to the report.
“International Petroleum Product Pricing is currently experiencing significant volatility due to geopolitical and economic factors, including events in the Middle East, China’s market dynamics, seasonal variations, production status, and other global influences,” the report states.
“The foreign exchange rate remains fairly stable, with minimal fluctuations observed over recent periods. Landing cost, being fundamentally influenced by these elements, is likely to change several times intra-day,” it adds.
