NNPCL Drops Petrol Price to N899/Litre for Marketers Amid Competition

The Nigerian National Petroleum Company Limited (NNPCL) has reduced the ex-depot price of Premium Motor Spirit (PMS), commonly known as petrol, from N1,020 to N899 per litre. This price cut, effective immediately, aligns with the pricing scheme initiated by Dangote Refinery just days earlier, which had also set the petrol price at N899 per litre.

Details of the Price Reduction

• New Ex-Depot Price: The reduction allows marketers to purchase petrol at N899 per litre, in line with the price offered by Dangote Refinery. However, those sourcing from Warri, Oghara, Port Harcourt, and Calabar will pay N970 per litre.
• Reason for the Reduction: The price cut by NNPCL is seen as a response to the competitive effects of deregulation in the downstream sector. Deregulation has spurred increased competition, especially after the Dangote Refinery’s price reduction, which has led to the drop in NNPCL’s pricing as well.

Market Reactions

• PETROAN’s Response: The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) praised NNPCL for the price cut, with its National Public Relations Officer, Dr. Joseph Obele, highlighting that this reduction showcases the positive impact of competition. Obele further expressed optimism that PMS prices could fall even further by January 2025 due to the global decline in crude oil prices and the recent strengthening of the naira.
• Price War: Obele described the situation as a price war, where competition between oil marketers benefits consumers. This is seen as a positive trend, and PETROAN advocates for the privatization of government-owned refineries to further enhance market competition.

Benefits to Consumers

• Lower Transportation Costs: The reduction in PMS prices is expected to reduce transportation costs for motorists, which could increase disposable income for Nigerians.
• Boost to Economic Activity: Lower fuel prices could stimulate economic growth by reducing production costs, leading to increased demand for goods and services.
• Improved Standard of Living: The reduction in fuel prices is anticipated to decrease the cost of living, allowing Nigerians to afford more necessities and improve their quality of life.

Quality Assurance Concerns

While PETROAN welcomes the price cuts, they also raised concerns over potential compromises in product quality due to competitive pricing. PETROAN has called on the Nigerian Midstream and Downstream Petroleum Regulatory Authority to ensure that all quality assurance standards are maintained to protect consumers.

This development is expected to spark a price war among oil marketers, benefiting consumers with lower petrol prices and potentially improving the overall economic environment.