Imported Petrol Cheaper Than Dangote’s N990/Litre- Marketers

The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has criticized Dangote Petroleum Refinery for selling petrol at N990 per liter, arguing that the pricing is inconsiderate given the substantial concessions the company received during construction, particularly in accessing foreign exchange.

PETROAN emphasized that imported petrol remains cheaper than Dangote’s price, with major marketers disclosing that the landing cost of imported petrol stood at N978 per liter as of October 31, 2024.

On Sunday, Dangote Refinery accused PETROAN and the Independent Petroleum Marketers Association of Nigeria (IPMAN) of planning to bring substandard petroleum products into Nigeria. Responding to this accusation on Monday, PETROAN Publicity Secretary, Joseph Obele, defended the association’s plans to introduce competitively priced petrol once they receive the necessary import license from the Nigerian Midstream and Downstream Petroleum Regulatory Authority.

“PETROAN will sell far less than the current selling rate of PMS in Nigeria when granted an import licence by the Nigerian Midstream and Downstream Petroleum Regulatory Authority,” Obele stated.

He highlighted that PETROAN has created a strategic business unit named PETROL, stressing their patriotic commitment to addressing the pricing turbulence in Nigeria’s downstream sector.

He also suggested that President Bola Tinubu’s reforms were viewed unfavorably by those benefiting from market monopolies.

According to Obele, fostering competition is crucial for ensuring consumer-friendly pricing. “Consumers get the best value for pricing when competition is at its peak, hence competition should be encouraged. Contrarily to competition, such a market will be exploitative and strictly for profiteering,” he said.

He dismissed Dangote Refinery’s allegations as a strategy to maintain its monopoly, noting that the accusations surfaced only after PETROAN and IPMAN disclosed plans to offer petrol at lower prices.

“It is important to set the records straight that PETROAN has never compared the price of Dangote PMS with any, other than the fact that Dangote’s PMS price wasn’t known until this morning at the press release by Dangote Refinery,” Obele clarified. He further explained that PETROAN is working with foreign refinery partners and financial backers to import high-quality petrol and sell it at rates lower than the prevailing market prices. The association expects to enter the market by December 2024, pending the approval of their import license and access to official foreign exchange rates from the Central Bank of Nigeria.

Obele also criticized the timing of Dangote Refinery’s pricing announcement, asserting that it came only after PETROAN and IPMAN expressed their readiness to offer more affordable petrol. “The rate of N990 as announced by Dangote refinery was inconsiderate based on the fact that Dangote refinery enjoyed massive concessions for accessing foreign exchange during the construction of the refinery,” he said.

He emphasized that pricing should be based on production costs plus a reasonable profit margin, not on international market rates. “The core determinant for setting the price is a consideration of the cost of production, then adding a fair margin. But this wasn’t the case for the determinant of PMS price by Dangote refinery as they said ‘the parameter was comparison with the international selling rate at the global market,’” Obele explained.

He concluded by arguing that goods from different markets vary in cost due to differing production expenses. “A nation that gave you a yet-to-be-disclosed concession for foreign exchange which was highly criticised by financial experts, such a country pricing template shouldn’t have been templated by the selling rate at the international market but rather it should have been the cost of production plus fair margin,” he stressed.

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