Naira Appreciation Leads to Lower Petrol Landing Cost
The landing cost of petrol in Nigeria has decreased from N981 per liter to N945.63 per liter between September 25 and September 27. This decline is attributed to the appreciation of the naira against the US dollar during the same period.
According to data released by the Major Energies Marketers Association of Nigeria (MEMAN), the exchange rate for the dollar improved from N1,667.22 on September 25 to N1,586.26 on September 27.
The drop in landing cost is a positive development for the Nigerian economy. It could potentially lead to lower pump prices for consumers, as importers will have lower costs to pass on. However, it’s important to note that other factors, such as government policies and refining capacity, also influence fuel prices.
Landing Cost Of Petrol Drops As Naira Gains
Also, Brent, the global benchmark for crude, dropped from the $73.67/barrel recorded in the last report released by MEMAN to $72.45 in the latest report on Monday.The fall must have also contributed to the reduction in the landing cost of imported petrol.The average ex-depot prices of PMS saw a marginal reduction in Lagos, Calabar, and Port Harcourt.
Lower Landing Costs for Diesel and Aviation FuelIn addition to petrol, the landing costs of diesel and aviation fuel have also decreased. The price of diesel dropped from N1,089 per liter to N1,068.04 per liter, while aviation fuel fell from N1,117.34 per liter to N1,079.79 per liter.The reduction in landing costs for these fuels is likely due to the same factors that influenced the decline in petrol prices: the appreciation of the naira and the decrease in Brent crude prices.Regarding the comparison between imported petrol and Dangote’s locally produced fuel, the MEMAN report suggests that the price difference might be less than N46 per liter. This calculation is based on the NNPC’s claim that it purchased Dangote’s fuel at N898 per liter.It’s important to note that the price difference between imported petrol and locally produced fuel can be influenced by various factors, including production costs, transportation expenses, and government policies.
The price of petrol in Nigeria has experienced significant fluctuations in recent months. Here’s a breakdown of the key developments: * Initial price hike: The price of petrol jumped from around N600 per liter to between N855 and N900 per liter. * Dangote refinery sales: With the commencement of petrol sales by the Dangote refinery, the NNPC announced new prices. * Price variations: The NNPC indicated that the price of petrol lifted from the Dangote refinery would vary across different regions of Nigeria. Prices were expected to be higher in the far north, with Borno State potentially reaching N1,019 per liter. In southern regions like Oyo and Rivers, the price was expected to be N960 per liter. Lagos and its environs were projected to have the lowest price at N950 per liter.These price adjustments highlight the complex factors that influence fuel prices in Nigeria, including production costs, transportation, and regional variations. While the introduction of locally produced fuel from the Dangote refinery may have some impact on prices, other factors continue to play a significant role.
However, it was observed that while the price of petrol was as high as N1,200 or more in some parts of Nigeria, some major marketers still sold a litre at N870 in Lagos.
During a media chat with senior media practitioners recently, the Executive Vice President, Downstream at the NNPC, Dapo Segun, explained that despite reaching an agreement with the management of the Dangote refinery, the issue of pricing remained market-driven.
Segun gave an insight into the discussions between the NNPC and Mr Aliko Dangote.
“Dangote said to us, ‘This is how much I want for it (PMS)’. And we say, ‘Hey, Dangote, if we go out there, we can get it for this much, so we won’t pay you this much for it‘. And we went into the negotiation. And that negotiation took us over a week to complete. They (Dangote officials) will come with their position, we’ll come with a counter; they’ll come with a revised position, and we’ll counter it.
At the end of the day, we were able to reach an agreement on what to be the price to pay for it,” Segun said, emphasising a statement by Soneye that the company would lift Dangote PMS only if it was cheaper than imported one.
Meanwhile, the sale of petrol to NNPC continues at the Dangote refinery as Nigerians are hopeful that the price of the commodity will crash when the naira crude sale begins today (October 1, 2024).