Marketers may turn away from imported petrol in favour of locally refined products as the cost of imported Premium Motor Spirit (petrol) rises to over N45 per litre above the price of petrol from the Dangote Petroleum Refinery, industry data have shown.
The development is likely to weaken the competitiveness of petrol imports further, buttressing calls by some marketers that the Federal Government should halt the importation of PMS because imported products are more expensive than locally refined fuel.
The latest energy bulletin of the Major Energies Marketers Association of Nigeria showed that while the Dangote refinery’s gantry price stood at N1,265 per litre, the spot import-parity price was N1,310.64 per litre under the ASPM benchmark.
Under another benchmark, the spot import-parity price stood at N1,309.63 per litre. The figures indicate that imported petrol was N45.64 per litre more expensive than the locally produced product under the ASPM benchmark and N44.63 higher under the NPSC-NOJ benchmark.
The development provides a fresh dimension to the debate over petrol pricing in Nigeria, coming shortly after the Dangote refinery increased its gantry price from N1,165 to N1,265 per litre last week.
Despite the N100 increase, the refinery’s product remained cheaper than the prevailing spot import-parity price, according to the MEMAN data.
The bulletin also put Dangote’s coastal PMS price at N1,245 per litre. The latest figures suggest that local refining continued to offer a price advantage over imported petrol, even as international refined-product prices remained elevated.
MEMAN reported that the seven-day average ICE petrol price stood at $1,337.96 per metric tonne.
The import-parity calculation reflects the cost of bringing refined petrol into Nigeria and therefore provides a useful benchmark for comparing imported products with locally refined petrol.
The development comes amid renewed debate over the latest petrol price increase by the Dangote refinery, with the refinery maintaining that its pricing decisions are influenced by the cost of crude and other operating considerations.
The refinery had previously explained that it was still processing crude purchased at higher prices, meaning changes in international crude prices do not immediately translate into changes in the cost of the crude being processed.
However, the MEMAN data shows that despite the latest increase, Dangote’s gantry price remained below the prevailing spot import-parity level.
The figures could strengthen the case for greater reliance on domestic refining, as marketers and consumers continue to grapple with the impact of fluctuations in international petroleum product prices and the naira exchange rate.
At N1,265 per litre, Dangote’s gantry price was therefore about N46 below what it would cost to import the equivalent petrol at the prevailing spot import-parity benchmark.
The price differential has also raised questions over the continued importation of petrol, with the Independent Petroleum Marketers Association of Nigeria earlier urging the Federal Government to halt the importation of premium motor spirit.
IPMAN had argued that imported petrol had become more expensive than locally refined products and was frustrating efforts to stabilise prices in the downstream sector.
The association said the continued issuance of fuel import licences was worsening price volatility, putting additional pressure on the naira and undermining the competitiveness of domestic refineries, particularly the Dangote Petroleum Refinery.
The National Publicity Secretary of IPMAN, Chinedu Ukadike, said the import licences issued by the Nigerian Midstream and Downstream Petroleum Regulatory Authority in July had failed to achieve their intended objective of moderating domestic fuel prices.
According to him, petrol imported under the licences was being sold at rates significantly higher than the price of products supplied by the Dangote refinery.
Ukadike said, “Independent marketers have looked at the issues of price volatility, import licences and the sale of petroleum products in dollars. I want to use this opportunity to urge the Federal Government to transparently review these issues through the Nigerian Midstream and Downstream Petroleum Regulatory Authority, which is the industry’s regulator.
“The recent import licences, which were expected to serve as a guide and a check on the prices of petroleum products refined locally, are not yielding the results we expected. We were shocked that the licences issued to depot owners to import petroleum products are resulting in prices far higher than what Dangote has been selling to us.”
He stressed that the objective of allowing fuel imports was to create competition capable of checking domestic prices but noted that the policy had produced the opposite outcome.
“The essence of the NMDPRA and the Federal Government opening up import licences was to check domestic fuel prices. Instead, we have found that the imported products have questionable quality and are more expensive.
“What is the essence of issuing these licences? They will only create tension in society. Price volatility is deepening and is affecting independent marketers. We do not know what to expect or where to turn,” he said.
Ukadike maintained that imported petrol remained significantly more expensive than supplies from the Dangote refinery, questioning the rationale behind continued imports.
“The implied offshore price of petroleum products is higher than Dangote’s prices. So, what is the essence of importing products from Lomé when they are more expensive than Dangote’s? It does not make any sense. It is putting unnecessary pressure on the dollar and the naira,” he stated.
Some marketers told our correspondent anonymously that “it does not make any economic sense to buy a product where it is more expensive”.
The report also showed that crude prices rose during the trading session, with Nigeria’s Brass River opening at $99.22 per barrel and closing at $101.19, representing a 1.99 per cent increase.