Nigerian motorists are bracing for another fuel price shock after the Dangote Petroleum Refinery raised its petrol price for the second time in five days, pushing its gantry price to N1,200 per litre.
The latest N15 increase, which took effect on Wednesday, August 26, moved the price from N1,185 to N1,200 per litre.
It means the refinery has added N35 to the price of petrol in just five days. Dangote had raised the price from N1,165 to N1,185 on August 21.
The latest adjustment was contained in a commercial communication sent to the refinery’s customers by its Group Commercial Operations.
The refinery also raised its coastal PMS price from N1,562,265 to N1,582,380 per metric tonne, representing an increase of N20,115.
Customers were directed to return existing Authorisation to Collect documents for repricing, while new volume contracts would be issued before loading could resume under the new rates.
Crude price falls, petrol goes up
The latest petrol hike has raised eyebrows because it came as international crude prices moved in the opposite direction.
Brent crude, which was trading above $93 per barrel when Dangote announced its previous increase, had fallen to around $88.48 per barrel by Tuesday — a drop of roughly $5.
Reuters also reported a sharp fall in crude prices on Tuesday as investors assessed the impact of fresh US sanctions against Iran and the possibility of reduced disruption to global oil supplies.
The development could trigger fresh questions over the factors determining petrol prices in Nigeria’s deregulated downstream market, particularly as motorists have yet to enjoy sustained relief from previous fuel price increases.
Pump price may hit N1,250
The impact of the latest increase is expected to be felt across the downstream market as marketers adjust for the new cost of obtaining petrol from the refinery.
Checks in Lagos had already shown PMS selling at about N1,195 to N1,197 per litre at some depots before the latest Dangote increase.
With transportation, logistics, storage and other operating expenses added, the latest adjustment could push pump prices towards N1,250 per litre or higher in some locations.
For millions of Nigerians, another rise in petrol prices could mean higher transport fares and increased costs of moving food and other goods.
Dangote’s growing dominance
The latest price move comes as the Dangote refinery continues to play a major role in Nigeria’s petrol supply.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority reported that the refinery supplied 87.55 per cent of the petrol supplied to Nigeria’s domestic market in May, delivering about 41.5 million litres daily.
The 650,000-barrel-per-day refinery has now reached its stated production capacity, while testing has reportedly reached 700,000 barrels per day. The company is also planning a major expansion over the next three years.
However, crude supply remains a major issue. Reuters reported that between 30 and 40 per cent of the refinery’s crude currently comes from countries such as the United States and Guyana, exposing its operations to international crude prices and freight costs.
The latest increase therefore leaves motorists facing a familiar question: if crude prices are falling, why is petrol getting more expensive?
The Dangote Group had not publicly explained the reason for the latest N15 increase as of press time.
