A significant decline in the landing cost of Premium Motor Spirit (PMS), or petrol, has sparked hopes of a potential price reduction. According to the Major Energies Marketers Association of Nigeria (MEMAN), the landing cost has dropped to N981 per litre, a substantial decrease from recent prices.
The decline is attributed to a drop in global crude oil prices. This could bring relief to consumers who have been grappling with rising fuel costs in recent months. The previous landing cost, around N1,130 per litre, has been reduced by over N140 as of September 25, 2024.
Crude oil prices and foreign exchange rates are key determinants of refined petroleum product costs, including petrol, diesel, aviation fuel, and kerosene. Brent crude, the global benchmark, has fluctuated between $70 and $75 per barrel this month, down from an average of $80 per barrel in August.
The decrease in landing cost coincides with major oil marketers resuming petrol imports in Nigeria. Following the deregulation of the downstream oil sector, these marketers are importing significant volumes of PMS to supplement domestic production. The Dangote Petroleum Refinery, which recently commenced operations, is also contributing to domestic petrol supply.
However, discrepancies surround the sale price of the refinery’s product to the Nigerian National Petroleum Company Limited (NNPC). While the NNPC claims to purchase fuel at N898 per litre, the refinery denies this figure. The NNPC previously stated it bought fuel from the refinery at N898 per litre but hiked the pump price to over N1000/litre.
Calculations suggest imported petrol may be N83 cheaper than Dangote Refinery’s product, based on the NNPC’s claimed purchase price of N898. This implies marketers may sell imported fuel at a comparatively lower price than Dangote Refinery’s product. The development raises anticipation for a potential reduction in petrol prices, offering relief to Nigerian consumers.
