Fuel importers panic as Dangote lowers petrol price below landing cost

 

Importers of petroleum products say the latest fuel price reduction by the Dangote Petroleum Refinery will undermine their business.

Some of the importers said dealers might be compelled to sell below their cost prices as consumers would only buy from where petrol is cheaper.

On Wednesday, the Dangote refinery announced a reduction in the ex-depot (gantry) price of petrol by N65, from N890 to N825 per litre, effective from today, February 27. This is the second price reduction in the new year, and the third one in a space of two months.

According to some of the petrol importers, the Dangote refinery is gradually making importation less attractive with how it has dropped the prices of petrol and diesel lately.

It was gathered that the landing cost of PMS was around N927 a litre in the past week, an amount higher than the ex-depot price of the Dangote.

The importers said they have been managing to sell the imported products with little or no margin due to the need to compete well in the market.

“Some of us who have imported PMS are feeling the heat of Dangote’s decision to slash prices. Though it is a good thing to reduce petrol price, it is taking a toll on our business. That’s the simple truth,” a dealer who spoke to our correspondent in confidence due to the nature of the matter, stated.

Another retailer noted that the Dangote refinery is reducing prices to discourage fuel importation, saying many will have to stop bringing in petroleum products from other countries.

“Dangote understands the competition in the business and this latest reduction will further discourage fuel imports. There will be losses as we may have to drop our prices too. At the end of the day, some of us will source our products locally. I will just advise Dangote to create a level playing field for all,” the retailer stated.

In an interview, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, confirmed that importers may incur losses as a result of the new price reduction.

Ukadike maintained that the price reduction would affect importers, stressing that Dangote was maximising the advantages of deregulation.

“Dangote may ‘kill’ fuel importers by this continued lowering of prices. All those importers who have challenged Dangote that they wanted to import cheaper fuel, as they’re just nearing the sea shore, Dangote will reduce the price and they will run into trouble,” Ukadike stated in his personal opinion.

Speaking on behalf of IPMAN, he described the price slash as a welcome development, saying the association will continue to patronise the refinery.

“It is a welcome development. We laud Dangote’s achievement of bringing the 650,000 single-train refinery to Nigeria. Independent marketers have justified supporting the removal of subsidies and supporting our local companies. We will continue to patronise Dangote via MRS, and we will do everything possible to support them,” he stated.

He pointed out that the availability of petrol is no longer an issue, asking the government to fix the depots and the pipelines.

“Our problem now is distribution, we want all the satellite depots to be in place and the pipelines repaired so that this product can be sent to the nooks and crannies of this country seamlessly. That will also further reduce the price. So, as independent marketers, we welcome the development of the Dangote refinery petrochemical mine. Wherever the product is cheap, we definitely will buy it,” he added.

He posited that the price reduction would reduce marketers’ huge investment, increasing their purchasing power.

“Also, it is giving us a choice of availability. So, we can buy from Dangote, we can also buy from the Nigerian National Petroleum Company Limited,” he maintained.

Similarly, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, also commended Dangote for the new development.

“It is a good development. PETROAN applauds that because Nigerians are going to be better for it. Congratulations to Nigerians,” Gillis-Harry said.

He stressed that environmental and economic factors will determine the price, going forward.

“The price will keep fluctuating, it will not be static. N825 per litre is welcome, and we salute Dangote for that,” he submitted.