Fuel prices in Nigeria may remain above 1,000 naira per litre for now despite the recent decline in global crude oil prices, unless fuel importers begin competing more aggressively with the Dangote Petroleum Refinery.
Industry sources say although international crude prices have fallen to about 70 dollars per barrel, domestic petrol prices have only recorded marginal reductions.
A senior official of the Dangote Group said the Federal Government should encourage licensed fuel importers to reduce their prices instead of expecting the refinery to take the lead.
According to the official, many importers are bringing in lower-cost petroleum products, yet those savings have not been fully reflected at filling stations.
The source also explained that the Dangote Refinery is still processing crude oil purchased when global prices were much higher, making a significant reduction in pump prices difficult in the short term.
The official further stated that the refinery continues to rely partly on imported crude because of limited domestic supply.
Data released by the Major Energies Marketers Association of Nigeria showed that the landed cost of imported petrol recently stood at about 1,023 naira per litre, while Dangote Refinery’s gantry price was approximately 1,075 naira per litre before the refinery later announced a 50-naira reduction.
The Independent Petroleum Marketers Association of Nigeria says importers are reluctant to cut prices sharply because they are uncertain about the refinery’s next pricing decision and fear suffering major financial losses if prices fall further.
Meanwhile, the Federal Government has warned against profiteering in the downstream petroleum sector.
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, said although the petroleum market has been deregulated, regulators still have a responsibility to protect consumers from unfair pricing practices.
The Federal Competition and Consumer Protection Commission has also expressed concern over the slow pace of fuel price reductions despite the decline in international crude oil prices.
However, petroleum marketers have rejected any move to impose fuel price controls, insisting that a deregulated market should allow prices to be determined by market forces.
Industry observers say Nigerians will be watching closely to see whether increased competition among refiners and importers eventually leads to lower pump prices in the coming weeks.
