Why Marketers May Dump Dangote Fuel

Oil marketers in Nigeria have expressed concerns about the current pricing dynamics in the downstream sector. Recent data reveals that the landing cost of imported Premium Motor Spirit (PMS) has dropped to N922.65 per litre, which is N32.35 lower than the price offered at the loading gantry of the Dangote Petroleum Refinery, currently at N955 per litre.

A major marketer, who preferred to remain anonymous, said, “The lower cost of imported petrol is often an incentive to dealers, and you won’t blame marketers who decide to import the product instead of buying from Dangote Refinery.”

This development, coupled with the availability of 76.84 million litres of imported petrol in the last two days, is creating a competitive environment in the sector.

Why Landing Costs Are Cheaper

The significant reduction in landing costs has been attributed to changes in global crude oil prices and other factors. According to a recent report by the Major Energies Marketers Association of Nigeria, the estimated import parity into tanks was N922.65 per litre on Friday. This was a 2.2% drop from the N943.75 per litre recorded on Thursday.

Chinedu Ukadike, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), commented, “We are all looking at cheaper rates, and that is what is happening now. There was no formal agreement to stop importation. It was simply a mutual understanding because Dangote’s products were initially cheaper.”

Ukadike clarified that marketers will naturally opt for the most cost-effective options to remain profitable.

Dangote’s Response to Pricing Pressures

The Dangote Petroleum Refinery had earlier attributed its price adjustments to fluctuations in the cost of crude oil. Last Sunday, the refinery announced a rise in petrol prices from N899.50 per litre to N955 per litre, citing global crude oil prices as the main factor.

However, stakeholders argue that this price is less competitive compared to imported alternatives. “Marketers will always follow the numbers. If importing is cheaper, then that’s the logical option,” said an industry insider.

READ ALSO: Increase In Pump Price Not From Us- Dangote Refinery

Marketers React to Non-Import Directive

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had previously advised against the importation of refined products, allowing the Dangote refinery time to prove its production capacity.

Billy Gillis-Harry, National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), said, “The idea was to give the Dangote refinery 180 days to prove its production capacity. So, I am surprised to hear about fuel imports during this period.”

When informed that 76.84 million litres of petrol were imported within two days, Gillis-Harry responded, “I am very surprised because the NMDPRA leads the non-import agreement. There was a clear understanding to prioritize Dangote’s products for 180 days.”

Marketers Challenge the Importation Policy

Contrary to Gillis-Harry’s claims, Ukadike stated that the so-called “non-import directive” was not legally binding. “It was not a formal agreement but rather a mutual understanding. If marketers find a cheaper alternative, they are free to pursue it,” he said.

He added that the NMDPRA is supposed to issue import licenses to anyone who can source fuel at a lower cost. “The focus is on providing cheaper alternatives to consumers, and that is what is happening now.”

Imported Fuel Gains Traction

Reports from the Nigerian Ports Authority revealed that two vessels carrying a total of 57,301 metric tonnes of petrol berthed at the Apapa and Tincan ports last week. These shipments, managed by Tera Shipping Limited and Peak Shipping Agency Nigeria Limited, brought in about 76.84 million litres of petrol within two days.

This influx of imported fuel is reshaping the market, with marketers now favouring cheaper imported options over Dangote’s products.

Future Implications for Dangote Fuel

As marketers turn to cheaper imports, concerns about the profitability of the Dangote refinery are mounting. The refinery, hailed as a game-changer for Nigeria’s petroleum industry, may face challenges in maintaining its market share unless its pricing becomes more competitive.

“Dangote Refinery has to find a way to align its pricing with the realities of the market,” said a marketer. “If the price gap continues, more marketers will move towards imports.”

The ongoing competition between imported fuel and Dangote Refinery’s products is shaping the downstream oil and gas sector. As marketers prioritise cost-effectiveness, the Dangote Refinery must adapt to remain competitive. The question remains: will marketers fully dump Dangote fuel, or can the refinery adjust to meet market demands?