Nigerians woke up to welcome news this week as Dangote Refinery announced a reduction in the price of Premium Motor Spirit (PMS), dropping from ₦990 to ₦970 per litre for bulk purchases of two million litres or more.
This move signals the refinery’s commitment to easing the financial burden on consumers while reinforcing its position as a pivotal player in Nigeria’s petroleum supply chain. Alongside this price adjustment, the week witnessed other significant milestones, challenges, and strategic developments that underscore the refinery’s growing influence on both domestic and regional markets. Below is an expanded analysis of the key highlights.
- Price Reduction for Petrol and Six-Month Supply Deal
In a strategic move, the refinery reduced petrol prices from ₦990 to ₦970 per litre for bulk supplies of two million litres or more. This gesture, framed as support for Nigerians, strengthens consumer loyalty while maintaining competitiveness. Additionally, a new six-month deal to supply 28 million litres of petrol daily to retailers assures market stability and mitigates risks of artificial scarcity. - Resumption of Crude Oil Imports from the US
After a three-month pause, Dangote Refinery resumed crude oil imports, purchasing two million barrels of WTI Midland crude from Chevron Corp. This diversification of supply ensures operational stability and supports increased refining capacity. The shipment, set to arrive in December, positions the refinery to meet both domestic and export demands efficiently. - Challenges with the Naira-for-Crude Scheme
The Federal Government’s naira-for-crude policy continues to create hurdles for Dangote Refinery. The Nigerian National Petroleum Company Limited (NNPCL) is unable to meet the agreed minimum supply of 385,000 barrels per day (bpd), far below the refinery’s requirement of 650,000 bpd. This shortfall underscores the urgency of policy reform to support domestic refiners and improve crude allocation efficiency. - Expansion into West African Markets
Dangote Refinery’s foray into regional markets, including exports to South Africa, Angola, Namibia, and potentially Ghana, cements its status as a regional energy leader. These moves address energy shortages in neighbouring countries while boosting Nigeria’s economic influence and creating new revenue streams, balancing local market constraints with diversified opportunities. - Major Marketers Shift to Dangote Refinery for Petrol Supply
The Major Energies Marketers Association of Nigeria (MEMAN) announced a complete halt in petrol imports by its members, who now rely on Dangote Refinery for supply. Over ten weeks, the refinery has supplied 148 million litres, showcasing its capacity to meet domestic demand reliably. This transition highlights growing confidence in Dangote Refinery as a cost-effective and dependable alternative to the volatile global market. - Comparison with Port Harcourt Refinery
While Dangote Refinery scales operations, the Port Harcourt Refinery lags. Limited to retail-level distribution, it is yet to commence bulk sales, reinforcing the critical role of private-sector players like Dangote in stabilising Nigeria’s fuel market. - Low AGO Stock and Price Inflation
A shortage of Automotive Gas Oil (AGO) at Dangote Refinery has enabled importers and marketers to inflate prices at storage facilities. This week, AGO prices rose sharply from ₦1045 to ₦1100 per litre, reflecting the impact of constrained refinery output on downstream pricing dynamics. As a result, logistics-dependent sectors are bearing the brunt of inflated costs, exacerbating supply chain challenges. - Massive Ongoing Construction at Dangote Refinery
Despite its growing output, Dangote Refinery remains in a skeletal state, with significant construction still underway. Thousands of workers continue to troop to the site daily, underscoring the scale of the unfinished project. While this ensures long-term capacity expansion, it highlights the refinery’s current limitations and the need for efficient resource allocation to fast-track full operational capacity.
Market Implications for PMS
The stability in PMS prices at Dangote Refinery signals improved supply dynamics, bolstered by secure contracts and strategic pricing. Lower wholesale prices could lead to marginal savings for consumers, provided transportation and retail costs remain stable. Additionally, consistent availability may curb hoarding and discourage artificial price hikes.
