Business

How Dangote and NNPC Competition Is Driving Petrol Price Drop, Says IPMAN

Published by Tope Fakinlede on December 30th, 2024.

How Dangote and NNPC Competition Is Driving Petrol Price Drop, Says IPMAN

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has credited the recent reduction in petrol prices to the intense competition between Dangote Refinery and NNPC Limited. According to IPMAN, this rivalry has significantly impacted the price of Premium Motor Spirit (PMS), commonly known as petrol.

Recent observations showed that several petrol stations across Nigeria have lowered their pump prices following a decrease in the ex-depot prices set by Dangote Refinery and the Port Harcourt Refinery. For example, NNPC Retail slashed its price from N1,030 to N965 per litre, while other retailers such as AA Rano and AYM Sharfa reduced theirs from N1,070 to N1,020 per litre.

However, some stations, like Conoil, have kept their prices unchanged at N1,090 per litre, the same as they were in November.

Speaking with Vanguard, IPMAN’s Public Relations Officer, Chief Chinedu Ukadike, highlighted that the competition between Dangote and NNPC refineries, along with an improved supply of petrol, has led to the price drop. He noted that typically, prices rise during periods of high demand, but the opposite is currently happening due to this competition.

“It’s a welcome development for both independent marketers and consumers,” Ukadike remarked. “With increased supply, we are now witnessing a price war between the two major players—NNPC and Dangote.”

Ukadike also noted that the expected startup of the Warri and Kaduna refineries next year would further intensify the competition and likely lower prices even more. He explained that independent marketers are now able to buy directly from both refineries, which has enhanced product availability and sales volumes.

“In the past, when prices were at N1,300 per litre, many of our members could barely sell 5,000 litres daily. But now, we’re doing far better. Marketers can now access products directly, and the NNPC portal is open for anyone to purchase as much as needed,” Ukadike added.

The reduction in bulk purchase requirements by Dangote Refinery has also been beneficial. Initially, Dangote limited bulk purchases to 10 million litres, but it now offers a more manageable two million litres, making it easier for independent marketers to place orders together.

As the Port Harcourt and Dangote refineries come online, there is growing optimism about Nigeria’s ability to meet its own petroleum needs, which could alleviate the pressure on the foreign exchange market. Dr. Muda Yusuf, Director/CEO of the Centre for the Promotion of Private Enterprise (CPPE), also expressed hope that the two refineries would ease demand for imported petrol and reduce the strain on Nigeria’s foreign exchange reserves.

In the meantime, oil marketers continue to adjust their pump prices in response to new ex-depot prices set by both NNPCL and Dangote Refinery, which were recently pegged at N899 per litre. This adjustment is expected to benefit consumers as marketers align their prices with these new rates.