The cost of importing petrol into Nigeria has surged by ₦88 per litre within a week, according to data from the Major Energy Marketers Association of Nigeria (MEMAN). This increase reflects ongoing market fluctuations and the impact of foreign exchange rates on fuel pricing.
Rising Landing Costs
As of this week, the landing cost of imported petrol has reached ₦885 per litre, compared to ₦797 last week. This sharp rise affects the overall pricing structure in the deregulated market, where international factors and exchange rate fluctuations determine fuel costs.
Dangote Refinery and Market Competition
The new landing cost is ₦25 higher than the ₦860 per litre that end-users currently pay for Dangote refined petrol through MRS and other distributors. The refinery’s ex-depot price stands at ₦815 per litre, making it ₦70 lower than the latest landing cost of imported petrol.
In recent months, the pump price of petrol had dropped from over ₦1,000 per litre in January to around ₦860, largely due to price reductions from the Dangote Refinery. However, with rising import costs, fuel prices may increase again.
Effects on Fuel Marketers
Fuel marketers have incurred losses as they have been selling petrol at lower prices than their cost price. The disagreement between the Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL) over the naira-for-crude deal has further complicated market conditions.
Following Dangote Group’s decision to halt fuel sales in naira last week, private depots in Lagos raised their loading costs to about ₦900 per litre, up from below ₦850 before the announcement.
Increase in Fuel Imports
Despite the presence of local refineries, petrol importation has increased. According to the Nigerian Ports Authority (NPA), seven vessels carrying 154.22 million litres of petrol arrived at Nigerian seaports between March 17 and 23. These shipments were received at the Tincan Port, Lekki Deep Seaport, and Calabar Port.
At the same time, Dangote Refinery imported 654,766 metric tonnes of crude oil within the same period, showing the continued reliance on external crude supplies.
Concerns Over Naira Transactions
Industry experts have raised concerns over the risks of using the naira for crude oil transactions. Olufemi Adewole, Executive Secretary of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), warned that this policy could destabilise the forex market and discourage foreign investment.
Similarly, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has urged the government to prevent Dangote Refinery from selling petrol to Nigerian marketers in dollars, arguing that it would worsen inflation and put pressure on the economy.
Future Market Expectations
The deregulated fuel market is undergoing significant changes, with more reliance on competition and international pricing mechanisms. MEMAN has stated that while market resistance is expected, the transition to full deregulation will bring long-term benefits, including more investment and efficiency.
As petrol landing costs continue to fluctuate, consumers and businesses are advised to monitor market trends and prepare for possible price adjustments in the coming weeks.
