- Marketers face losses
By Editor
The reduction in prices of premium motor spirit (PMS) or petrol, which began on Monday, appeared to have kicked in a market disruption, with several independent marketers seeing low patronage.
On Monday, petrol prices crashed for the first time post deregulation era following the reduction in ex depot price of the product announced by the Dangote Refinery from N970 to N899.50 per litre from its 650,000 barrels per day refinery located in Lagos. The Nigerian National Petroleum Company (NNPC) Limited, also announced a price slash on its petrol ex-depot price from N1,020 to N899 per litre.
While President of Dangote Industries Limited, Aliko Dangote, brokered a pact with MRS Oil and Gas to offer petrol at N935 per litre at all MRS Oil retail outlets across the country, NNPCL on its part implement a region-based pricing of the product, leading to a price cut across all its retail outlets. For instance, in Lagos, Ogun and Abuja, the NNPCL now sells the product at N925, N950 and N960 per litre respectively.
Although some independent and major oil marketers have tried to follow suit, as at yesterday, majority of them are yet to embrace the price cut. Across the Lagos metropolis yesterday, most of the marketers still sold at between N1, 000 and N1, 070 per litre.
While this has led to very low patronage at outlets with higher prices, NNPCL, MRS, Bovas filling stations have seen a surge in patronage. Since the price cut announcement and implement on Monday, these aforementioned stations have been experiencing queues, giving an impression of scarcity.
A motorist at the NNPCL filling station on Ogunnusi road, Ojodu, Lagos,who identified himself as Adekunle Oyewale, however said the queues are a function of the reduced prices being offered by the stations. He argued that it makes no economic sense for a motorist to buy from a station that sells at a higher rate when he can make some savings buying from NNPCL, MRS or Bovas whose prices are cheaper.
“Buying from the NNPC station saves me over N100 per litre if I buy from those that haven’t keyed into the price cut; it makes no economic sense. I will rather endure the slight queue here and save money,” he submitted.
Findings by The Nation, yesterday, indicated that oil marketers that are yet to key into the new price regime are worried that their sales is already being affected, leading to losses. The Nation observed that while queues were noticeable at NNPC and MRS outlets, such stations barely had vehicles at their pumps even though they had petrol and opened.
The few motorists that drove in to buy petrol from them claimed they were simply in a hurry to get to their destination. “I just need to get to my destination early because I am travelling out of Lagos, otherwise I would not have come to buy petrol here at N1, 070 per litre when I can get at NNPC at N925. That is over N100 difference,” Sulaimon Kareem, a motorist at a popular independent filling station, said.
The Chief Executive Officer, Center for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, however explained that in no time, the other petrol stations will be forced to reduced their pump price if they intend to remain in the business.
According to him, stations that are yet to reduce their price may be those that purchased the product at the old rate before the price cut; hence, they may want to sell off the batch before keying into the new price regime.
“What you are seeing in the price ‘war’ is the beauty of competition and the best way to protect the consumer from exploitation is competition. The competition we are seeing now is beneficial to the people, and we pray it continues this way. This is when the people will get the benefits of the deregulation if properly managed.
“The petrol stations not yet reducing their prices will have no choice than to follow suit if they realise that they have no sales, as their tanks or storage will remain full. If they have no sales, their creditors will come after them because they won’t be in a position to pay since their have low patronage, so they will still cut down on their price,” Dr. Yusuf explained. Their
But irrespective of the petrol price cut, it is yet to reflect on the cost of transportation. A commuter, at Berger Bus stop, Tosin Ogunye, however blamed this on the festive period. He further said that the government may have to prevail on the tranporters to ensure that the gesture is reciprocated by way of reduction in cost of transportation.
Stakeholders have also hailed the price reduction while they expressed satisfaction at the development, saying it is one of the numerous benefits of deregulation in the downstream sector, they nonetheless cautioned on its downside.
The National President, Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Billy Harry, hailed the development as a positive step toward easing the financial burden on citizens.
According to him, the price cut is a much-needed relief for motorists and Nigerians, especially during the festive season.
“The reduction in PMS price by NNPCL is a demonstration of the company’s commitment to making petroleum products more affordable for Nigerians. We commend NNPCL for responding to our call for affordable PMS prices,” Harry said.
He explained that lower fuel costs will reduce transportation expenses, enabling motorists to save on fuel and increase their disposable income. Besides, he said the reduction is expected to boost economic activity by lowering production costs, which will drive demand for goods and services.
The PETROAN boss also commended Dangote Refinery for its efforts in the sector, acknowledging the refinery’s role in fostering a competitive environment that benefits consumers and the economy.
He however cautioned on compromising product quality as a result of competitive pricing and urged the industry regulator, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to ensure strict adherence to quality assurance standards across the industry.
