The landing cost of Premium Motor Spirit (PMS), commonly known as petrol, in Nigeria fell to N971 per litre in November 2024, marking a significant shift in the country’s fuel import economy.
This reduction represents a 20.23 percent drop compared to the N1,219 per litre recorded in August, according to data from the Major Energy Marketers Association.
The recent decline has been largely attributed to fluctuations in the Naira-dollar exchange rate and international crude oil prices, which play central roles in determining the cost of fuel imports.
As of Friday’s close, Nigeria’s exchange rate with the dollar was N1678.87, reflecting a notable depreciation from the August rate of N1,611 per dollar.
Concurrently, the price of Brent crude, a benchmark for international oil prices, settled at $73.63 per barrel, down from the August price of $80.72 per barrel. These shifts are considered critical factors in the decreased landing cost, as the cost of imports generally hinges on these two variables.
The Major Energy Marketers Association emphasized that even minor fluctuations in exchange rates and crude prices can cause significant changes in landing costs, given Nigeria’s dependency on imported refined petrol.
Despite this drop in landing costs, retail prices of petrol in Nigeria remain high, with consumers paying between N1,060 and N1,200 per litre at retail outlets, including those managed by the Nigerian National Petroleum Company Limited (NNPC) and independent filling stations.
The discrepancy between landing cost and retail price is likely influenced by a combination of logistical costs, distribution challenges, and tax implications that ultimately affect the end-user price.
The surge in pump prices has been striking. In August 2024, petrol retailed for N617 per litre, but as of November 11, 2024, the cost had climbed to well over N1,060 per litre.
This upward trend in petrol prices has placed additional strain on consumers, intensifying calls for intervention from both government and industry stakeholders to ease the economic burden on Nigerians.
Additionally, the Dangote Refinery, a significant player in Nigeria’s refining sector, recently disclosed its ex-depot prices for petrol.
Ex-depot prices—the rate at which fuel is sold to distributors before reaching retail stations—stand at N960 per litre for deliveries via ships and N990 per litre for trucks.
This pricing structure provides insight into the operating costs at one of the country’s major refineries, which is still relatively close to the prevailing retail prices, underscoring the complexities in bringing fuel costs down for consumers.
Meanwhile, the Nigeria Labour Congress (NLC) voiced its concerns about the high cost of fuel. In a communiqué released on Sunday, the union argued that the current pump price is above what would be expected based on the market value of petrol, suggesting that Nigerians are paying more than necessary at the pumps.
The NLC’s position highlights ongoing issues within Nigeria’s fuel supply chain and adds to the mounting pressure on policymakers to address the underlying inefficiencies and cost drivers that sustain high petrol prices.
The interplay of exchange rates, crude oil prices, and local refining capacity continues to shape the fuel market in Nigeria, with complex outcomes for consumers and businesses alike.
In the face of these fluctuations, there is an increasing call for sustainable solutions, including improving the refining sector and stabilizing currency rates, to help bring the cost of essential commodities like petrol within reach for the average Nigerian.
