Omanghana
Imported petrol has officially become more expensive than fuel produced locally by the Dangote Petroleum Refinery, marking a significant shift in Nigeria’s downstream petroleum market.
The landing cost of imported Premium Motor Spirit (PMS) has risen to ₦1,223.32 per liter, exceeding Dangote Refinery’s gantry price of ₦1,215 per liter. The difference means locally refined petrol is currently ₦8.32 cheaper per liter than imported supplies.
The reversal has been attributed mainly to the weakening of the naira, rising international crude oil prices and fluctuating freight costs. Since imported petroleum products are purchased and transported in foreign currency, any decline in the naira’s value increases the amount importers must pay to bring fuel into Nigeria.
Higher crude prices and shipping expenses have also reduced the profit margins available to independent importers, making it increasingly difficult for imported cargoes to compete with supplies from domestic refineries.
The development has renewed calls from the Independent Petroleum Marketers Association of Nigeria (IPMAN) and other downstream industry groups for the federal government to stop issuing petrol import licenses.
The groups argue that Nigeria now possesses sufficient domestic refining capacity to meet local demand, particularly as the Dangote Petroleum Refinery expands its operations. They maintain that continued imports could undermine local production, increase pressure on the country’s foreign-exchange reserves and expose consumers to global price volatility.
Dangote Refinery’s ₦1,215-per-litre gantry price is also emerging as an important benchmark within the domestic market. Rather than imported cargoes determining local prices, foreign suppliers are increasingly being forced to compete with prices set by Nigeria’s refining industry.
Supporters of an import restriction believe prioritizing locally refined products would conserve foreign exchange, support employment, strengthen domestic energy security and encourage further investment in Nigeria’s refining infrastructure.
However, regulators will need to ensure that local refineries can provide sufficient and consistent supplies before restricting imports. Any disruption in domestic production could create shortages and push retail prices higher if alternative sources are unavailable.
The latest price comparison represents a potentially important structural transition for Africa’s largest petroleum consumer. After decades of dependence on imported petrol despite being a major crude oil producer, Nigeria may be moving towards a market in which domestic refining plays the leading role in determining fuel availability and pricing.
Source: Omanghana
