Dangote Petroleum Refinery & Petrochemicals Company Limited on Thursday slashed its ex-depot price of Premium Motor Spirit (PMS) by N50 per litre, marking its fourth price cut in the past one month.
In its statement issued on Thursday, the company indicated that the latest N50 per litre reduction brought the cumulative decrease in the refinery’s PMS ex-depot price to N200 per litre since May 30, reducing the gantry price to N1,075.
During the 30-day period, the company confirmed that it had reduced the ex-depot price of Automotive Gas Oil (AGO) by N300 per litre and Jet A1 aviation fuel by N520 per litre.
The refinery’s management further clarified that petroleum product pricing cannot mirror daily movements in international crude oil markets since crude oil is purchased weeks, and sometimes months, before it is processed.
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According to the management, the petroleum products currently being supplied to the market by the company are being produced from crude inventories acquired during periods of substantially higher prices.
It stated that the average landed cost of crude processed stood at approximately US$124.80 per barrel in May and US$95.25 per barrel in June, compared with the current international benchmark of about US$71.01 per barrel.
Clarifying that the company’s crude procurement costs are not based solely on the headline ICE Brent benchmark commonly quoted in the media, the Dangote Refinery management discloses that rather crude is purchased on a Dated Brent basis together with applicable market premiums, freight and logistics costs, resulting in actual feedstock costs that differ materially from benchmark prices.
Despite the sharp increase in crude acquisition costs during the period, the management stated that it the company deliberately refrained from transferring the full impact to consumers, choosing instead to absorb a significant portion of the additional costs in order to support market stability and cushion Nigerians from the volatility in global energy markets.
It noted that this pricing approach had helped to keep petroleum product prices in Nigeria below the prices in neighbouring countries, even after accounting for applicable taxes.
The management added that as lower priced crude cargoes progressively enter its production cycle, the refinery had commenced systematically passing the benefits to the market through phased price reductions.
The statement further reads: “Today’s N50 per litre reduction is the fourth price cut in one month, bringing cumulative reductions to above N200 per litre on PMS. This approach ensures that pricing decisions are anchored on actual production economics and inventory costs rather than short-term fluctuations in international oil markets.
“Nigeria today benefits from the stabilising role of domestic refining capacity. The Dangote Petroleum Refinery currently supplies volumes sufficient to meet national demand, helping to strengthen energy security, eliminate dependence on imports, conserve foreign exchange and provide greater price stability for consumers and businesses”, it added.
The company’s management stated that if international crude prices remained favourable and lower cost feedstock continues to replace higher priced inventories, Nigerians should expect further moderation in petroleum product prices.
