Dangote Petroleum Refinery’s recent reduction in the ex-depot price of petrol has significantly impacted petroleum marketers. This decision, lowering the price from N950 to N890 per liter, is believed to be a response to warnings that some traders might resort to importing fuel if foreign prices remain lower than locally refined products. Dangote’s stated aim is to provide economic relief and align with global energy sector developments and declining crude oil prices, urging marketers to pass these savings on to consumers. However, the price reduction presents both opportunities and challenges for marketers.
The sudden price change leaves marketers who purchased fuel shortly before the announcement facing potential losses, as they may be compelled to sell below cost. Hammed Fashola, Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), acknowledged the positive aspects of the reduction but emphasized the financial risks for marketers. He pointed out that marketers must now be more cautious about their purchases, considering both the source and price, to avoid continuous losses, as they are the ones who ultimately bear the brunt of price fluctuations. Fashola explained that when a price reduction occurs, marketers must lower their prices to remain competitive, even if it means selling at a loss. He admitted that in the current competitive environment, it’s difficult to coordinate stakeholders before price reviews. He also noted that Dangote’s price cut follows threats from importers to boycott local products in favor of cheaper imports, highlighting the competitive nature of the market.
Billy Gillis-Harry, National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), expressed excitement about the price reduction, anticipating benefits for citizens and the economy. He commended Dangote refinery and hoped other operators would follow suit. Gillis-Harry believes the lower fuel price will reduce the cost of living, transportation expenses, and positively impact the economy by boosting economic activity and demand. He also anticipates a positive effect on the country’s inflation rate. Chinedu Ukadike, National Publicity Secretary of IPMAN, reiterated the financial risks faced by marketers during price reductions, recalling the impact of Dangote’s entry into the diesel market earlier in 2024. He explained that marketers are wary of lifting fuel due to the risk of losses, especially given current high interest rates on loans used to finance fuel purchases. He emphasized that during price drops, marketers are left to absorb losses, highlighting the precarious position they face in the market.
