The Fluctuating Price Of PMS

We do not know who or what to commend or blame for the un­steady price of Pre­mium Motor Spirit (petrol) sold by Dangote Refinery, Nigerian National Petroleum Company Limited and others. Well, except to assume that the Petroleum In­dustry Act has finally unleashed petroleum sector market forces.

As soon as petrol from Dangote Refinery hit the market at a high price in 2024, and imported pet­rol came in at a lower price, many compatriots – rightly or wrongly – assumed that Aliko Dangote, pro­prietor of Dangote Refinery, had finally showed his true colour as a monopolist.

This accusation further trended with media reports that Dangote Refinery instituted a N100 billion law suit at an Abuja Federal High Court to stop Nigerian National Petroleum Company Limited and petrol marketers from importing petrol into Nigeria.

The accusation against Aliko Dangote gained more credence when Dangote Refinery described the Federal Competition and Con­sumer Protection Commission, that asked to be joined as co-de­fendant with NNPCL, as a med­dlesome interloper.

Towards the end of 2024, Dan­gote Refinery suddenly reduced the price of its petrol to N899. Nigerians were happy, and emer­gency analysts came out, beating their chests, claiming that market forces were finally coming to play in the Nigerian petrol market.

The analysts, however, went quiet and lost their equilibrium, when, on 19th January, 2025, Dan­gote Refinery reversed itself, and raised the price of its petrol to N950, with the justification that the price of crude petroleum in the international market rose by 15 per cent.

But on 1st February, 2025, a pleasant surprise came when Dangote Refinery announced yet another downward review of the price of its petrol: It shaved the price from N950 to N850. Again, Dangote Refinery explained that its action was due to a significant decline in international crude prices.

When Nigerians wondered why changes in the price of crude pe­troleum at the international mar­ket was almost always immediate­ly reflected in price of petroleum products, the (plausible) explana­tion that was offered was that Ni­geria had no strategic reserve of crude petroleum and petroleum products.

There is the argument that be­cause crude petroleum is an “in­ternational citizen,” that is al­ways traded in the US dollar, any fluctuation in the naira-dollar exchange rate must be swiftly re­flected in the price of petroleum products.

But we think that there is prob­ably a price war of sort going on among Dangote Refinery, NNP­CL, which practically insists on importing petrol, other domestic refineries and the cartel of pe­troleum products importers and marketers.

Media reports indicate that Dangote Refinery’s sudden drop of petrol is not looking good for marketers with inventory that was bought at the previous high­er price. They fear an impending bleeding of red ink of losses that may run into tens of millions.

Hammed Fashola, Vice Presi­dent of Independent Petroleum Marketers Association of Nige­ria, laments: “A marketer who stocked up… may still have un­sold fuel before the price cut (by Dangote Refinery)… (And) if you don’t reduce your price, nearby marketers, who buy at the new rate, will. Within days, you’ll lose customers unless you adjust.” He then rationalizes, “This is a part of the deregulation.”

Another media report indicates that some marketers or dealers are coming to terms with the new market realities by replacing the NNPCL logo after dumping its franchise that previously enabled their petrol stations to trade as NNPCL stations.

With this step, they effectively substituted NNPCL, that has lost its authorisation and monopoly as exclusive importer of petroleum products, with Dangote Refinery, the obvious game changer, or any of the other suppliers within Ni­geria or abroad.

It is interesting to note that NNPCL’s public communications group is hardly forthcoming with the official explanations or responses of the oil behemoth to what appears to be a “civil war” by the erstwhile NNPCL market­ers.

It looks as if the jungle of free market, that seeks to deregulate the midstream and downstream sub-sectors of the Nigerian petrol trade, is maturing. We can only hope that it will lead to significant price reductions and regular sup­ply of petroleum products.

Amidst all these is the uncon­firmed good news report that is emanating from Petroleum Re­tails Outlet Owners Association of Nigeria, which is to the effect that its members can now load petroleum products, including petrol, diesel and kerosene, from NNPCL refineries in Port Har­court and Warri.

While these developments may be true beginnings of the full reign of market forces in Nigeria’s downstream petroleum sub-sec­tor, we fear that President Donald Trump’s erratic imposition of tar­iffs on shipment of Iranian crude petroleum to China may tailspin the price of petroleum products.

Therefore, we suggest that as Nigeria’s refineries become reg­ular producers and suppliers of petroleum products, players in the petroleum industry should be thinking about strategic crude and petroleum products reserves.