In a significant development for Nigeria’s fuel market, the Nigerian National Petroleum Company (NNPC) has released an estimate of the petrol prices that will be charged at its retail stations across the country, sourced from the Dangote Refinery. The prices are set to take effect from October 2024.
According to a statement issued by the NNPC’s Chief Corporate Communications Officer, Olufemi Soneye, the company has purchased petrol from the Dangote Refinery for the month of September. The acquisition was made in U.S. dollars, a factor that will influence the final pump prices.
Pricing Breakdown
The NNPC provided a detailed breakdown of the factors that contribute to the estimated petrol prices. These factors include:
Platts 10ppm rate: This is the international benchmark price for petrol. For September 2024, the rate is $690 per metric ton.
Dangote Refinery’s gantry price: This is the price at which the Dangote Refinery sells petrol to the NNPC. It is set at $736 per metric ton.
Regulatory fees: These include fees imposed by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and inspection fees.
Distribution costs: These costs vary depending on the location of the retail station.
Margin: This is the profit margin that the NNPC will earn on the sale of petrol.
Varying Price Across State
The estimated petrol prices vary across different states due to transportation costs and distribution challenges. Here is a breakdown of the prices for selected states:
Sokoto State: N999.22
Kano State: N999.22
Kaduna State: N999.22
Federal Capital Territory (FCT): N992.22
Borno State: N1,019.22
Oyo State: N960.22
Imo State: N980.22
Rivers State: N980.22
Lagos State: N950.22
The estimated petrol prices vary across different states in Nigeria. The highest prices are expected in Borno State, where consumers will pay N1,019.22 per liter. The lowest prices are anticipated in Lagos State, where the pump price is estimated to be N950.22 per liter.
Read Also: VAT Reforms to Boost Economy and Support SMEs
The variation in prices is primarily attributed to the transportation costs and distribution challenges associated with different regions. While Lagos is relatively close to the Dangote Refinery, states in the northern part of the country face longer transportation distances, which contribute to higher costs.
Impact on Consumers
The release of the estimated petrol prices has sparked concerns among consumers. The prices are significantly higher than the previous subsidized rates, which were in place before the deregulation of the fuel market. Many Nigerians fear that the increased cost of petrol will have a cascading effect on other goods and services, leading to inflation.
Government’s Role
The NNPC has emphasized that the petrol prices are not set by the government but are negotiated directly between the company and the Dangote Refinery. This aligns with the provisions of the Petroleum Industry Act (PIA), which grants the NNPC greater autonomy in its operations.
“PMS prices are not set by Government, but negotiated directly between parties on an arm’s length basis – PIA Section 206 (1).
“NNPC is paying Dangote Refinery in USD for September 2024 PMS offtake, as Naira transactions will only commence on local production.
“If the quoted pricing (Platts 10ppm FOB AR Barge + $46 premium) is disputed, NNPC will be grateful for any discount from Dangote Refinery, which will be passed on 100% to the public.”
Read Also: NNPC Seeks Permanent Presence at Dangote Refinery Amidst Crude Supply Deal
However, the government still plays a crucial role in ensuring that the prices are fair and reasonable. The government can intervene if it believes that the prices are excessive or if they are negatively impacting the economy.
If You Ask Me: Outlook
The future of petrol prices in Nigeria remains uncertain. The prices are likely to fluctuate depending on various factors, including global crude oil prices, exchange rates, and the performance of the domestic economy.
The NNPC has indicated that it is working to ensure a stable supply of petrol to the country. The company is also exploring alternative sources of fuel, such as renewable energy, to reduce its reliance on fossil fuels.
As Nigeria continues to transition to a more market-driven economy, it is essential for the government and the private sector to work together to ensure that the country has access to affordable and reliable energy.
