The price war in the petroleum sector has continued to deepen as some retail outlets have dropped the prices of Premium Motor Spirit (petrol) below the ₦739 per litre recommended by the Dangote Petroleum Refinery.
The Dangote refinery slashed petrol pump prices from about ₦900 to ₦739 in December, many importers and depot owners have lamented mounting losses. To remain competitive, many operators were forced to sell petrol at rates below their costs.
During a survey over the weekend, it was observed that some filling stations now sell PMS cheaper than MRS Oil, the main partner endorsed by the Dangote refinery to champion the price reduction to ₦739 per litre.
As of Sunday, NIPCO sold PMS at ₦738 per litre, SAO filling stations sold it at ₦735, while Akiavic offered the product at ₦737. An AP filling station beside an MRS outlet in Mowe, Ogun State, dropped its price to ₦736 per litre.
It was gathered that filling stations located in the same areas now closely monitor rivals’ pump prices to avoid being undercut in the highly competitive market. Motorists troop to stations offering the lowest prices, leaving outlets selling at higher rates struggling for customers.
According to the Major Energies Marketers Association of Nigeria, the landing cost of petrol averaged ₦762.38 per litre, while Dangote’s ex-gantry price remained ₦699. But even with the difference, importers still adjusted prices to compete with the Dangote-backed MRS.
It was reported earlier that both Dangote and importers were counting losses running into billions of naira.
Operators said the decision to lower pump prices had nothing to do with whether imported petrol was cheaper or not. According to them, players across the market were simply striving not to be left behind.
“This is not a function of whether imports are better or not, but simply a market strategy to get a good share of the market. However, it needs to be stressed that we are not at war with any marketer or depot operator nor any refinery,” an operator, who spoke in confidence due to the stiff competition in the downstream, said.
On December 12, the Dangote refinery surprised depot owners and marketers when it slashed the gantry price of petrol by ₦129, from ₦828 to ₦699 per litre.
A few days later, the President of the Dangote Group, Aliko Dangote, said he had information that some marketers planned to keep pump prices high despite the reduction. Consequently, Dangote vowed to enforce the new pricing regime, with MRS selling petrol at ₦739 per litre.
“We are going to use whatever resources we have to make sure that we crash the price down. For December and January, we don’t want people to sell petrol for more than N740 nationwide. Those who want to keep the price high to sabotage the government, we will fight as much as we can to make sure that these prices are down. If you have money to come and buy, you can pick up petrol at N699,” Dangote said.
As more MRS filling stations in Lagos and Ogun states began dispensing Dangote refinery petrol at ₦739 per litre, motorists started boycotting outlets selling at higher prices. This led to fuel queues at MRS filling stations in Lagos and other locations.
However, the tide is gradually turning as some filling stations now sell petrol at prices lower than those of MRS.
The PUNCH