Marketers of petroleum products have explained that many filling stations continue to sell Premium Motor Spirit also known as petrol, at prices exceeding N1,000 per litre because they are still working through old stock.
The previous stock of PMS was purchased at N970 per litre, and many stations still have this inventory in their tanks.
On December 19, 2024, the Dangote refinery reduced the ex-depot price of petrol from N970 to N899.50 per litre, triggering a significant shift in pricing across the sector.
Furthermore, Dangote entered into a partnership with MRS Petrol stations to sell petrol at N935 per litre through retail outlets nationwide.
President of Dangote Industries, Aliko Dangote, clarified that the price reduction was primarily influenced by complex market forces.
This led to what some called a price war, causing the Nigerian National Petroleum Company Limited to lower its ex-depot price to N899 per litre.
As a result, NNPC outlets in Lagos and surrounding areas adjusted their pumps to N925 per litre.
Other major marketers followed suit, with some selling petrol at N990, N980, N950, or N935 per litre.
However, despite these price reductions, many stations still offer petrol above N1,000 per litre.
In Lagos, Ogun, and other states, some stations sell at N1,070 per litre, with others pricing it around N1,050, N1,030, or N1,000 as of Wednesday.
The discrepancy in prices between these stations and those operated by major marketers has contributed to the long queues at the latter.
The National Vice President of the Independent Petroleum Marketers Association of Nigeria, Hammed Fashola, explained that marketers are still grappling with the old stock bought at the previous prices.
He emphasized that the reduction can’t take effect immediately.
“Some of our members have old stocks. So, there’s no way they can just start immediately. It’s only when they go back to the market to purchase at the lower price, then they will start selling at the new price. If you look around, as of yesterday, I see many of our members have come down to N940 or N935 in Lagos. So, by next week, you will see more of them. Once they finish with their old stock, they will start selling at the reduced rate,” Fashola stated.
He acknowledged the competitive nature of the market, asserting that no marketer wants to fall behind.
“You cannot deceive yourself. This is competition. This is what we have been asking for. So, if you like, put your fuel at N1,500, nobody will buy it. So, it’s not deliberate. If you are still seeing a few of us that are still selling at N1,000, it is because of the old stock. Once they finish with their old stocks, they will start selling at the lower price,” Fashola emphasized.
When reminded that filling stations would not have kept the old price if the price had increased, Fashola responded, “Well, as a businessman, your purpose is to remain in the business. So, if you make a huge loss, you can go down. That’s just it. It is natural.”
Fashola also noted that many marketers are currently incurring losses due to the price reductions.
He shared an example from his own experience, stating, “Some of my stations yesterday, when we looked at our stock, maybe we had 20,000 litres in some of our stations, we calculated our losses and I thought it was minimal. So, we reduced our prices despite being the old stock.”
He acknowledged the benefits of deregulation but also pointed out the challenges it poses.
“The negative effect of deregulation is like what we are just discussing. If you buy a product at maybe, N1,000 today, and tomorrow, the price goes down to N950. You’ve already recorded a N50 loss,” he explained. “You buy a product today from a depot and the following day, the price goes down. Have you finished that stock? It’s not possible.”
Fashola elaborated on the financial challenges marketers face in the current climate, particularly after the removal of fuel subsidies.
“As the price of PMS rose from N200 to N1,000 per litre, we are finding it difficult to do business, especially as the interest rates rise monthly in banks. We need more money to remain in business, but with a little margin,” he stated. “This is really impacting on us.”
Fashola advised marketers to prepare for the evolving market dynamics, saying, “We cannot be doing our business the way we used to do it before.”
The National Publicity Secretary of the Petroleum Products Retail Outlet Owners Association of Nigeria, Joseph Obele, said that no member of their association has yet purchased fuel at the reduced rate.
He further justified why some stations continue to sell PMS at higher prices, adding that there is a significant price disparity between Lagos and other regions such as Port Harcourt.
“The NNPC sells PMS at N899 in Lagos and N970 in Port Harcourt due to logistics,” Obele explained.
