Nigeria’s downstream petroleum industry is in the throes of a new tussle over control as independent marketers are increasingly shifting the loading of petrol trucks from the Dangote Petroleum Refinery to their own, private depots that sell at slightly lower prices.
On Friday, market checks indicated that several private operators are now selling Premium Motor Spirit (PMS), popularly known as petrol, at less than the Dangote Refinery ex-depot price of N1,275 per litre, ushering in a new trend of loading patterns in the market to reduce running costs.
The move highlights the competition that has intensified in Nigeria’s deregulated petroleum market, where minor price differentials can make a big difference in the buying process and market share.
The prices of the major depots were obtained from pricing data and were seen to have sold petrol at N1,272 per litre each, while African Terminal, Integrated, Ascon and Bono kept the price at N1,274 per litre.
The price of petrol at Dangote Refinery has, however, been left at N1,275 per litre as of Friday.
While the cost gap might seem small, it has grown more pronounced amid rising transportation costs, financing costs, and distribution issues in the fuel supply chain, said industry players.
In response to dwindling profit margins, marketers who have known what it takes to load reported they are now more conscious of the cost of every naira saved per litre when it comes to the loading business.
The distinction might be small on the page, but when multiplied by large numbers can prove lucrative.
The recent price volatility follows a downward trend in international crude oil prices that has impacted price expectations across the domestic petroleum market.
Private depot operators seem to be more responsive to the price signals emanating from the global market in an effort to lure more volumes of trucks and bolster their competitive standing, industry players said.
Analysts believe that the pricing policy of the other depots could push Dangote Refinery to re-think the current ex-depot pricing if the rivals manage to maintain lower pricing for a much longer time.
This refinery, which has become a major player in Nigeria’s fuel supply chain, now has to safeguard market share in a growingly competitive market, where flexibility in pricing has become an important aspect of winning patronage.
Witnesses also highlight a wider shift in the downstream segment, in which the down-regulation of the industry is fostering greater competition and dynamism in the industry.
Given the context of a business landscape that is impacted by volatile crude oil prices, currency fluctuations and shifting consumer appetites, it appears that marketers are focusing on cost-efficiency.
The price competition among depot owners and refiners may only benefit consumers if it spills over into lower pump prices throughout the nation, say industry players.
For the time being, the competition for the truck’s business and market share has turned into a new page, with private depots clashing with the control wielded by the largest refinery in Africa and marking a more competitive future for the Nigerian petroleum industry.
