This has compelled other stations to lower their petrol prices by about N100 per litre, an amount that is far below their cost of purchase, indicating the severity of the price war in the downstream oil sector.
Last week, the Dangote refinery shocked depot owners and marketers when it slashed the gantry price of petrol by N129, from N828 to N699 per litre. During a recent press briefing, the President of the Dangote Group, Aliko Dangote, said he had information that some marketers planned to keep pump prices high despite the reduction in the gantry price.
Consequently, Dangote vowed to enforce the new price regime, with MRS selling petrol at N739 from last Tuesday. “I was told that the marketers have met with (some officials) and were told to make sure that the price is maintained high. But this price we are going to introduce, we are going to start with MRS stations, most likely on Tuesday (last week) in Lagos; that N970 per litre, you won’t see it again. We have also asked members of IPMAN to come now. We have asked anybody who can buy 10 trucks to come and buy 10 trucks at N699.
“Invesitigations revealed that when some MRS filling stations in Lagos dropped the price of petrol on Tuesday, it triggered long queues of vehicles seeking to buy the commodity at the outlets. It was observed that the MRS filling station in Alapere, Lagos, recorded a large turnout of buyers, many of whom boycotted other outlets selling petrol above N800 per litre.
As a result on Sunday, filling stations had started reducing prices in order to remain competitive in the market. From over N900 last week, many retail outlets now sell petrol below N800 per litre as motorists patronise those with lower prices.
While buyers thronged MRS and other stations with cheaper fuel, outlets selling at higher prices struggled to attract customers.
“The good thing is that there is always an MRS in almost every neighbourhood you turn to, and this has given buyers the opportunity to shun other stations to buy the cheaper Dangote petrol from MRS. This is a major concern for all traders nationwide,” a major oil marketer familiar with the development, who spoke to our correspondent in confidence in order not to be victimised, stated on Sunday.
As of Sunday, many filling stations had effected changes in their pump prices.
For instance, SGR filling station in Ogun sold petrol at N750 per litre, while Petrocam in Mowe sold the fuel at N785 per litre. The stations struggled to compete with the N739 price offered by MRS opposite the RCCG Camp Ground. Before now, their prices were close to N900.
Heyden, known to be a partner of Dangote, had yet to lower its price, selling petrol at N875 per liter, while AP sold the product at N800 per litre. It was observed that Mobil filling stations along the Lagos-Ibadan Expressway sold petrol at N780; Akiavic, N799; Habeeb, N850; Eternal, N880; and Asharami, N890 per litre.
The fuel prices represent a significant reduction of about N100 or more compared to their previous price levels before Dangote dropped the price. However, The PUNCH reports that the reduction comes at heavy losses to both Dangote and the marketers competing with him.
Dealers suffer losses
Amid the intense competition, the Nigerian National Petroleum Company Limited also reduced petrol prices from N875 to between N825 and N840, depending on the location. The state-owned company is one of the biggest importers of petrol in November, according to a report by the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
In the NMDPRA fact sheet, the NNPC, said to be the supplier of last resort, imported petrol in November to build inventory and further guarantee supply during the peak demand period.
However, at a landing cost of about N828 per litre, according to the Major Energies Marketers Association of Nigeria, importers like the NNPC would find it difficult to compete with Dangote’s N699 per litre ex-depot price and N739 per litre pump price, thereby selling the product below the landing cost.
Recall that the NNPC used to be the sole importer of petrol due to subsidies. As the Dangote refinery began petrol production a year ago, the sector was fully deregulated, and the queues that used to build up at NNPC stations because of price differentials vanished.
It was gathered that many NNPC stations in Lagos now struggle for customers who opt for lower petrol prices.
Meanwhile, as marketers said they were losing billions of naira, Dangote replied that he was also losing money. Findings show that petrol importers are on the verge of losing as much as N102.48bn monthly following the Dangote refinery’s reduction in gantry price.
At the same time, the refinery is projected to lose about N91bn in a month as a direct consequence of the price cut, underscoring the intensity of the competition currently reshaping Nigeria’s downstream oil market.
The spokesperson of the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, earlier said, “Marketers will lose over N80bn on this reduction. We will lose more than N80bn. And now that this reduction is there, you will see that the pump price will start dropping gradually from N900 towards N750 per litre,” he said, adding that consumers would naturally flock to stations selling cheaper fuel.
Source: PUNCH
