In a bold move that could reshape Nigeria’s downstream oil market, the Dangote Petroleum Refinery has reduced the gantry price of premium motor spirit (PMS) better known as petrol to ₦825 per litre, down from earlier reports of over ₦900. This strategic cut aims to ease the fuel cost burden on oil marketers and, hopefully, trickle down to consumers at the filling stations.
What is the Gantry Price?
The gantry price is the ex-depot price at which marketers buy fuel directly from the refinery or depot. It excludes logistics and retailer mark-ups. If refined and sold domestically, a lower gantry price could lower pump prices, provided there’s minimal price manipulation across the supply chain.
Why This Move Matters
- Foreign Exchange Savings:
By refining locally instead of importing, Nigeria saves hard-earned forex used for overseas PMS procurement. - Supply Chain Shift:
Marketers like NNPC, Petrocam, and Rainoil are already lifting products directly from the Dangote plant, signalling a realignment of domestic fuel sourcing. - Price Pressure on Importers:
If Dangote maintains lower prices with quality supply, fuel importers may be forced to drop their prices or risk losing market share.
Will Pump Prices Drop Soon?
Don’t celebrate just yet.
- Transport Costs: Many depots are still located far from inland cities. Add ₦30–₦50/litre for logistics.
- Retail Margins: Marketers typically add profit margins of ₦20–₦30/litre.
- Market Volatility: Global crude oil prices, dollar rates, and fuel scarcity may still distort final pump prices.
Estimated pump price post-mark-up: ₦890–₦920 per litre.
Market Implications
|
Factor |
Impact |
|
Refinery competition |
Could trigger price wars |
|
FX reserves |
Reduced pressure on imports |
|
Transport inflation |
May stabilize if fuel costs ease |
|
Political optics |
Gov’t may tout it as relief win |
Financial Juggernut Insight
While ₦825 ex-depot pricing is a win on paper, Nigeria’s real battle lies in transparency and transport efficiency. Dangote Refinery has taken a solid first step, but pump price cuts will depend on how honest intermediaries are.
Keep an eye on:
- Filling station price boards this week
- NNPC’s distribution moves
- Exchange rate shifts affecting logistics