Petroleum marketers in Nigeria have voiced concerns that unstable Premium Motor Spirit (PMS) prices might cause erratic fuel supply at filling stations. They noted that while there is no shortage of products due to local refining, station owners are increasingly hesitant to lift products from depots.
Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), told PrimeBusinessAfrica, “Everybody is trying to be very careful. It’s not that there is no product. There is availability of the product. But the price scare is what everybody is very careful about. Sometimes, when the price goes down, you see people losing billions of naira. So, everybody is being cautious.”
Join our WhatsApp ChannelPrice Changes Create Risks for Filling Station Owners
Ukadike explained that the constant fluctuations in PMS prices have made running filling stations a high-risk business. According to him, marketers often incur significant losses when prices drop.
“When the price goes up, marketers add more money, which is not profit,” he clarified. “They add money to continue to purchase the product. If the price goes up and you sell at your old price, you will not have anything again. You won’t be able to back up.”
He also recalled how the entry of the Dangote Refinery into the market in early 2024 caused a sudden drop in diesel prices. “When Dangote Refinery came in, it was reducing prices, and marketers were losing money. Did anybody tell marketers not to sell again or that they are going to repay them the money lost? Nobody said so, and nobody will say so,” he said.
Huge Costs Push Small Marketers Out of Business
Ukadike highlighted the financial challenges small marketers face, saying many are leaving the business for larger players due to the massive capital required.
READ ALSO: Dangote Refinery PMS Price Drop Will Ease Suffering Of Nigerians – PETROAN
“The business is becoming something else. Very soon, it will be left for the big gladiators. The volume of funds is huge. It’s not something somebody will just toy with. Forty-five thousand litres of the same product is very close to N50 million to purchase. Your gain is not even up to the value of what you invest in the business. I keep telling people, sometimes we might not make up to N300,000 from a business we spent N50 million on,” he explained.
Will There Be Fuel Scarcity?
Asked if the PMS price instability could lead to fuel scarcity, Ukadike responded, “There won’t be scarcity as long as domestic refining continues. But there would be epileptic supply as a result of the price scare.”
He warned that the erratic supply might impact fuel availability and affordability, especially in rural areas.
Marketers Consider Importing Cheaper PMS
Some marketers are reportedly considering importing PMS from other countries, as the landing cost is cheaper than the local price. As of Monday, the Nigerian National Petroleum Company Limited (NNPCL) sells PMS at N960 per litre, while the DangoteRefinery sells through distributors at N970 per litre. In contrast, imported PMS costs about N922 per litre.
Billy Gillis-Harry, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), confirmed that some marketers had planned to import PMS. However, the association decided against it to support local refining.
“We had companies willing to import for us, and it was cheaper. But we also look at the local values. That’s why we agreed to stop imports completely. Like I said, it’s a deregulated economy. The rules of the Petroleum Industry Act and deregulation will hold sway,” he said.
Call for Government Support
Gillis-Harry urged the government to assist retail outlet owners with single-digit interest loans to sustain their businesses.
“We need support to stay afloat. If nothing is done, there will be job losses, and smaller players in the industry will completely vanish,” he cautioned.
As PMS price fluctuations continue, marketers and consumers alike are left uncertain about the future of fuel availability and affordability in Nigeria.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.