In a recent development, the Dangote Refinery has announced an increase in the price of Premium Motor Spirit (PMS) for bulk buyers, raising it from ₦899.50 to ₦955 per litre. This adjustment, effective from 5:30 PM on January 17, 2025, represents a 6.17% increase, amounting to an additional ₦55.5 per litre.
Revised Pricing Structure
The refinery’s new pricing framework is tiered based on purchase volumes:
- 2 million to 4.99 million litres: Price set at ₦955 per litre.
- 5 million litres and above: Price set at ₦950 per litre.
This structure incentivizes larger purchases by offering a slight discount for higher volume transactions.
Factors Influencing the Price Increase
The upward adjustment in petrol prices is attributed to several key factors:
- Global Crude Oil Prices: A consistent surge in the price of Brent crude, the global benchmark, has increased refining costs.
- Market Dynamics: The transition from subsidized to market-driven pricing in Nigeria’s petroleum sector has led to adjustments reflecting true market conditions.
- Operational Costs: The Dangote Refinery, with a capacity of 650,000 barrels per day, factors in operational expenses and the need for sustainable profitability in its pricing strategy.
Implications for the Nigerian Market
This price increase is expected to have several implications:
- Downstream Sector Impact: Private depots and retail markets may adjust their prices accordingly, affecting the broader supply chain.
- Consumer Pricing: End-users might experience higher fuel prices at retail outlets, influencing transportation and goods costs.
- Economic Considerations: The adjustment underscores the complexities of Nigeria’s shift from fuel subsidies to a deregulated market, balancing economic realities with consumer affordability.
Conclusion
The Dangote Refinery’s decision to raise petrol prices reflects the interplay of global oil trends and domestic economic policies. As Nigeria continues to navigate its energy sector reforms, stakeholders will need to adapt to these evolving market conditions.
