Dangote Petroleum Refinery’s decision to slash the ex-depot price of Premium Motor Spirit (PMS) from N950 to N890 per litre has drawn mixed reactions from petroleum marketers across Nigeria, as some face significant financial losses due to the sudden price adjustment.
The price reduction, announced late on Saturday, aims to offer relief to Nigerian consumers and stimulate the economy. According to Dangote Refinery, the adjustment follows favorable changes in the global energy sector, including a decline in international crude oil prices. The refinery also encouraged marketers to pass on the benefits of the reduction to the public.
“By reducing the price of PMS, we aim to ensure that Nigerians benefit from falling global energy costs,” said Anthony Chiejina, Dangote Group’s Chief Branding and Communications Officer, in a statement.
While the price cut is seen as a positive development for consumers, it has raised concerns among marketers, particularly those who purchased fuel at higher prices just before the announcement. Hammed Fashola, Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), highlighted the difficulties faced by marketers who are now forced to sell at a loss.
“Some marketers bought the product at the higher price just before the reduction,” Fashola explained. “Now, they have no choice but to sell at the new lower price, incurring significant losses.”
Fashola further emphasized that price reductions like this, though beneficial for consumers, create challenges for marketers in a competitive market. He noted that competition among marketers will inevitably lead to lower prices, but at the expense of their profitability. “The marketer who doesn’t adjust to the new price will lose customers,” he stated.
Despite the negative impacts on some marketers, Fashola and other stakeholders recognize the broader benefits of Dangote’s price cut. Billy Gillis-Harry, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), commended the refinery’s decision, saying it would lead to a reduction in the cost of living and transportation for Nigerians.
“Consumers will benefit greatly from this price reduction,” said Gillis-Harry. “It will lower the overall cost of goods and services and positively impact the economy.”
The price drop is also expected to encourage other market players, including the Nigerian National Petroleum Corporation (NNPC), to follow suit in order to remain competitive.
As Dangote’s price cut continues to send ripples through the Nigerian petroleum industry, the hope is that the new market dynamics will foster healthier competition, ultimately benefiting the Nigerian economy and its citizens.
