The price of Premium Motor Spirit (PMS) may rise in the coming days as the landing cost of imported petrol continues to increase amid a surge in fuel imports. This follows the suspension of naira-based petroleum sales by the Dangote Refinery after the Federal Government allegedly halted the naira-for-crude deal.
A scheduled meeting between the Technical Sub-Committee on the Naira-for-Crude Policy, Dangote Refinery, and government officials was postponed, reportedly due to the Nigerian Upstream Petroleum Regulatory Commission’s failure to present alternative options. The meeting is now expected to take place before the Sallah break.
According to data from the Major Energies Marketers Association of Nigeria (MEMAN), the landing cost of imported petrol rose by N88 within a week, climbing from N797 per litre to N885 per litre. This increase is likely to reflect in retail pump prices soon.
Stakeholders in MEMAN argue that price fluctuations are inevitable in a deregulated market, despite resistance from those accustomed to past price controls. Currently, the new landing cost is N25 higher than the N860 per litre that end users pay for Dangote petrol through MRS and other partners. Meanwhile, the refinery’s ex-depot price remains at N815 per litre, which is still N70 lower than the new landing cost of imported fuel.
With the suspension of naira sales, the cost of loading petrol at private depots in Lagos has already surged to N900 per litre, up from less than N850 per litre. There are concerns that imported fuel prices may hit N1,000 per litre once additional charges and margins are factored in.
In recent weeks, the pump price of petrol had dropped from around N1,000 per litre in January to an average of N860 per litre, primarily due to price cuts by the Dangote Refinery. However, with no crude supply available in naira and continued forex instability, fuel prices are expected to rise again.
Dangote Group, in a recent statement, explained that the suspension of naira sales was necessary to prevent a mismatch between sales revenue and crude purchase obligations, which are currently priced in US dollars. The company emphasized that it had already sold more fuel in naira than it had received in naira-denominated crude, prompting the shift to dollar-based transactions.
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