At $72 per barrel, imported petrol should be cheaper in Nigeria – Experts report

Monday, November 11, 2024 - Over the weekend, experts and other stakeholders said that with the current price of crude oil at $72 per barrel, the cost of Premium Motor Spirit (PMS), also known as petrol, should be lower in Nigeria.

They said the current price of N1, 025 per litre (Lagos) was taken when crude oil, a major feedstock stood at more than $80 per barrel in the global market September 2024.

Since then, they said the price of crude has been volatile before dropping to the current $72 per barrel, without reflecting in the domestic price of petrol.

In different interviews with Vanguard, the experts noted that deregulation as currently practiced should enable the market to respond seamlessly to changes, including crude oil, the major raw material.

On his part, a Port Harcourt-based energy analyst, Dr. Bala Zakki, said: “The irresponsible petroleum products price dynamics in Nigeria is never obtainable in any Organisation of Petroleum Exporting Countries, OPEC member nations and the reason is very simple and straightforward.

“OPEC member nations have their functional state-owned refineries. No responsible government will or should abdicate its responsibilities of providing goods & service to the private sector.

“Globally, private sector operators are known to be shylocks, exploitative and profit maximizers.”

Similarly, Chairman of the Lagos State chapter of the Petroleum Products Retail Outlets Owners Association of Nigeria, PETROAN, Mr. Joseph Ehimen, said: “The prices that are driven by market forces would slightly fall though it will be a short term because local sources may fight back.”

Also, the Chief Executive Officer, Major Energy Marketers Association of Nigeria, MEMAN, Clement Isong, said: “The global market has been volatile, dropping and going back up and dropping again.

“Theoretically, petrol prices can fall in the domestic market, if the international prices are lower or continue to drop lower than the local prices.”

As reported by Vanguard, the landing cost of petrol, dropped by 4.5 per cent to N903 per litre in October 2024, from N945.63/litre in September 2024.

Data released by the Major Energies Marketers Association, MEMAN, showed that the landing cost stood at N945.63 in September 2024.

However, the transactional analysis obtained by Vanguard, yesterday, indicated that the landing cost stood at N903.64 per litre in October 2024.

According to the breakdown, the total direct cost, including product cost, freight (Lome – Lagos), port charges, Nigerian Midstream and Downstream Petroleum Regulatory Authority,  NMDPRA levy, Storage cost, Marine insurance and fendering cost at N863.06 per litre.

The transactional analysis, which guides oil traders and other stakeholders, puts total finance cost, including letter of credit (N15.60) and interest (N24.98) to N40.55 per litre.

The transactional analysis did not provide reasons for the drop in the landing cost but checks by Vanguard pointed to the relatively low price of crude oil, which stood at about $72 per barrel during the period.