Petrol Marketers Report Petrol Landing Cost Reaches N1,117 per Litre.
The Major Energy Marketers Association of Nigeria (MEMAN) has revealed that the landing cost of Premium Motor Spirit (PMS), commonly known as petrol, reached N1,117 per litre as of July 16, 2024. This suggests that the Nigerian National Petroleum Company (NNPC) Limited is still subsidizing petrol sold across the country. Additionally, the landing costs of Automotive Gas Oil (AGO) and Aviation Turbine Kerosene (ATK) were reported as N1,157 and N1,217 per litre for a 20KT vessel and a 15KT vessel, respectively, landing in Apapa, Lagos.
These figures were disclosed during MEMAN’s Quarterly Press Webinar and engagement with energy correspondents. The speakers highlighted the ongoing financial strain on Nigeria due to the subsidies and emphasized that despite the Federal Government’s claims of removing the petrol subsidy, its elimination has not been realized.
Mr. Bello Rabiu, an Independent Consultant and Former Chief Operating Officer, Upstream of the NNPC, presented on the theme: “Immersion of Dangote Refinery in the PMS Supply Chain (Call for Competitive, Efficient, and Sustainably Liberalized Downstream and Petroleum Sector in Nigeria).” He disclosed that a total of 1.3 billion litres of NNPC PMS were imported into the country through a Direct Sale-Direct Purchase (DSDP) arrangement. Rabiu argued that it is not competitive for the NNPC to be the sole marketer, controlling supply and fixing prices, effectively creating a monopoly within the Nigerian downstream sector.
Rabiu noted that the NNPC’s monopolistic control contradicts the Petroleum Industry Act (PIA) 2021, which aims for a competitive environment with multiple suppliers. He emphasized that the lack of transparency in the pricing and importation process has led to significant revenue leakages and potential hidden subsidies. Rabiu called for a liberalized market with operational refineries and pipeline works to achieve an efficient oil and gas sector across upstream, midstream, and downstream systems.
Rabiu also highlighted that refining petroleum products domestically is preferable to importing refined products. He pointed out that due to the NNPC’s dominance as the major importer, it is challenging for any refinery to scale up, as higher production costs compared to imported products make competition difficult.
The Nigerian Government spends N1.5 trillion Naira monthly on petroleum product importation, according to Rabiu. He suggested the reintroduction of a pricing template to encourage market efficiency and competitive behavior and called for regulatory intervention to ensure the smooth entry of new players and protect consumers.
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Dr. Abiodun Adedipe, Chief Consultant of B. Adedipe and Associate Limited, spoke on the issues in local supply and refined petroleum products. He stated that the NNPC’s monopoly in importation has created more crises for the downstream sector, leading to price hikes at fuel pumps due to inefficiencies. Adedipe emphasized the need for a level playing field for all players, stating that modular refineries and other big refineries cannot operate effectively under the current monopoly.
Adedipe identified challenges such as persistent oil theft, decreased production, and increased importation of fuel and lubricants, which have distorted the market and pressured the Naira in the FX market. He called for increased local refining capacity to reduce dependence on imports and stabilize prices.
Adedipe urged all stakeholders, including oil producers, refiners, marketers, transporters, consumers, media, NGOs, and development partners, to collaborate to ensure a stable and efficient supply chain. He emphasized the need for transparency and competition in the market to avoid monopolistic practices and promote fair pricing. Adedipe also highlighted the importance of aggressively pursuing energy diversification for long-term stability and sustainability, alongside strong regulatory oversight to ensure transparency, competition, and accountability among all stakeholders.
