The price of Premium Motor Spirit (PMS) could increase in the coming days as the landing cost of imported petrol rises alongside a surge in fuel imports. This comes after Dangote Refinery suspended naira-based petroleum sales, reportedly following the Federal Government’s halt of the naira-for-crude deal.
The Nigerian Upstream Petroleum Regulatory Commission allegedly failed to provide alternate choices, which resulted in the postponement of a planned meeting between government officials, Dangote Refinery, and the Technical Sub-Committee on the Naira-for-Crude Policy. It is now anticipated that the meeting will happen prior to the Sallah break.
According to data from the Major Energies Marketers Association of Nigeria (MEMAN), the landing cost of imported petrol rose by N88 within a week, climbing from N797 per litre to N885 per litre. This increase is likely to reflect in retail pump prices soon.
Stakeholders in MEMAN argue that price fluctuations are inevitable in a deregulated market, despite resistance from those accustomed to past price controls. Currently, the new landing cost is N25 higher than the N860 per litre that end users pay for Dangote petrol through MRS and other partners. Meanwhile, the refinery’s ex-depot price remains at N815 per litre, which is still N70 lower than the new landing cost of imported fuel.
With the suspension of naira sales, the cost of loading petrol at private depots in Lagos has already surged to N900 per litre, up from less than N850 per litre. There are concerns that imported fuel prices may hit N1,000 per litre once additional charges and margins are factored in.
In recent weeks, the pump price of petrol had dropped from around N1,000 per litre in January to an average of N860 per litre, primarily due to price cuts by the Dangote Refinery. However, with no crude supply available in naira and continued forex instability, fuel prices are expected to rise again.
Dangote Group recently stated that it had already sold more fuel in naira than it had received in naira-denominated crude, which prompted the switch to dollar-based transactions, and that the suspension of naira sales was required to avoid a discrepancy between sales revenue and crude purchase obligations, which are currently priced in US dollars.
