The Nigerian National Petroleum Corporation Limited (NNPC Ltd) has disclosed its estimated prices for Premium Motor Spirit (PMS) from the Dangote Refinery.
These prices, released on September 16, 2024, take us through the rates for petrol in NNPC’s retail stations across the country, with a particular focus on Lagos.
This announcement follows ongoing negotiations with the Dangote Refinery.
In line with the Petroleum Industry Act (PIA) provisions, PMS prices in Nigeria are no longer set by the government but are determined through negotiation between the parties involved.
Highlights of the September 2024 Pricing Structure
According to the detailed price breakdown provided by NNPC Ltd, the price per liter of PMS in Lagos is estimated at NGN 950.22.
This figure includes the following parts:
– The base price from Dangote Refinery, calculated based on the S&P Global Platts 10ppm Sulphur Gasoline index, was set at NGN 898.78 per litre, based on a price of $0.55 per litre at an exchange rate of NGN 1,637.59 to the dollar.
– Additional costs such as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) fee of NGN 8.99, an inspection fee of NGN 0.97, and distribution costs within Lagos of NGN 15.00.
– A margin of NGN 26.48 for retailers.
These factors combine to give the final pump price of NGN 950.22 per litre for petrol in Lagos, a price point expected to set the trend for other regions in Nigeria.
Payment Terms and Exchange Rate Considerations
One notable aspect of the announcement is that NNPC Ltd is paying Dangote Refinery in US dollars for the PMS offtake in September 2024. Naira transactions will only commence on October 1, 2024.
The exchange rate of NGN 1,637.59 per dollar used in the pricing calculations shows how important the forex dynamics are in the local fuel market. The NNPC has acknowledged the potential for price adjustments and remains open to negotiating discounts with the Dangote Refinery. Any price reductions secured will be passed on directly to the Nigerian public, which could bring some relief to consumers amid rising fuel costs.
What do you need to know?
The Dangote Refinery, Africa’s largest petroleum refinery, began rolling out PMS in the Nigerian market earlier. Located in Lekki, Lagos, the refinery boasts a production capacity of 650,000 barrels per day.
Before the refinery’s operation, Nigeria was heavily reliant on imported petroleum products, despite being one of the largest oil producers in Africa.
The Dangote Refinery was seen as a game changer, expected to significantly reduce the country’s import of fuel and other refined products. It was anticipated that with local refining, the cost of PMS would decrease. However, global oil market dynamics and foreign exchange challenges have impacted the price Nigerians pay at the pump.
While the Dangote Refinery provides a local source of PMS, external factors such as the global price of crude oil and exchange rates remain influential.
The Nigerian public is watching closely for potential changes in fuel pricing. The transition from dollar-based transactions to naira-based transactions in October 2024 could influence future price adjustments, especially as the naira’s value fluctuates against the dollar.
Additionally, NNPC Ltd has emphasized its commitment to transparency, ensuring that any cost savings achieved through negotiations with the Dangote Refinery will be directly passed on to the public.
For now, Lagos residents and other Nigerians will need to adjust to the new pump price of NGN 950.22 per litre, a reflection of the current market realities.
