At last, oil prices fall at Christmas!
Sopuruchi Onwuka
It is a surprise to Nigerian motorists that the nation’s main transportation fuel, the premium motor spirit (PMS) which is also called petrol, is not only sufficient in supply but also cheaper at the peak on annual demand season: Christmas.
As the Yuletide approached, the key major domestic market suppliers comprising the Nigerian National Petroleum Company (NNPC) Limited and the Dangote Industries Limited which operates the Dangote Refinery entered fierce competition to corner greater sales opportunity offered by the effective demand season.
But the competition leaves members of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) in the cold as retail margins thin down and erode the value of existing stock.
Since last weekend, Dangote Refinery and the NNPC Limited have been on the road with attractive retail prices in attempt to win more customers, offtakers, retailers and even consumers.
On December 19, Dangote Petroleum Refinery slashed its ex-depot price to ₦899.50 per litre and partnered with MRS Oil Nigeria Plc to sell petrol at ₦935 per litre at its retail outlets nationwide. It also offered credit purchase to offtakers that already hold records of effective demand with the refinery.
The NNPC Limited which has a wider network of offtakers and retail partners across the country has since responded with reduction of its ex-depot price to ₦899 per litre, translating to N925 per liter at operated retail stations in Lagos.
Independent marketing groups that still rely on imports have also cut retail process at their forte areas across the country.
However, all the supply sources projected the price cuts as gesture of magnanimity to Nigerians in the face of the yuletide season. They failed to admit that the price drop was compelled primarily by competition amid falling international prices of crude oil and refined products.
Only the Major Energy Marketers Association of Nigeria (MEMAN) has openly disclosed that the falling prices are reflective of international market trends where the prices of crude oil and associated products are taking a hit from a combination of falling demand and oversupply.
MEMAN stated that landing cost of petrol in Nigeria marginally dropped from N971 to N970 per liter across one year from November 2023 to November 2024. It stated that the price reflected the movements in the international crude oil market and the local foreign exchange market respectively.
Checks on crude oil prices by The Oracle Today showed that prices have marinated a downward trend, dropping to $69.49 per barrel at the close of market on December 23. The new crude oil and foreign exchange prices compels further reduction in retail prices of petrol given that all petroleum transactions in the domestic market are done in Naira.
Both the NNPC Limited and Dangote Industries Limited obtain their crude oil supplies from the domestic market and in local currency under official policy incentive which saves them freight and forex associated costs.
Thus, attributing the price reduction to corporate goodwill by the two local refiners smacks of deceit and low operational integrity. The only system working for Nigerians under the prevailing price fluctuation is competition, as price drops were rare during the subsidy era when the NNPC ruled the market as supply monopoly.
