Dangote’s Price Slash Forces Marketers to Sell at Loss

Kehinde Fajobi

The decision by Dangote Petroleum Refinery to reduce the ex-depot price of petrol from ₦950 to ₦890 per litre on Saturday has left many petroleum marketers struggling with financial losses.

Some marketers noted that the sudden price cut was likely triggered by warnings that traders might turn to cheaper imported petrol.

Announcing the price reduction, Dangote Group’s Chief Branding and Communications Officer, Anthony Chiejina, said, “In a bold move to drive economic relief for Nigerians, Dangote Petroleum Refinery has reduced the ex-depot price of Premium Motor Spirit, commonly known as petrol, from ₦950 to ₦890 per litre, effective from Saturday.”

He attributed the decision to “favourable developments in the global energy sector and a significant decline in international crude oil prices,” adding that it would lower petrol costs nationwide and create a positive economic impact.

However, some marketers are now forced to sell their stock at a loss.

Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Hammed Fashola, said the price cut had both positive and negative effects.

“For instance, maybe a marketer purchased some product on Friday. I am sure the marketer would not have sold it before the new reduction happened. That is the negative aspect of it. But we have to abide by it. We have to live with it. That is the beauty of deregulation,” he told The Punch.

He explained that competition forces marketers to sell below cost to clear old stock.

“When this happens, the only option a marketer has is to bring down the price. Because if you don’t do that, the competition will set in,” he said.

Fashola noted that the price cut was a response to threats by some importers who claimed foreign petrol was cheaper than Dangote’s.

“Some marketers and importers were threatening that an imported PMS is much cheaper than a Dangote PMS. So, Dangote is reacting to this with the price reduction. That is the beauty of competition,” he said, adding that the move benefits consumers.

Asked if the Nigerian National Petroleum Company Limited (NNPC) would also cut prices, he replied, “They have to. If they want to remain in business, they have to. It is a reaction, and it will go through the chain of supply.”

National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, also predicted an NNPC price reduction.

“There is an evident possibility that the NNPC will reduce prices,” he said, welcoming Dangote’s price cut as a relief for Nigerians.

“The reduction in PMS ex-depot price is expected to have a far-reaching impact on the lives of Nigerian citizens,” he said, adding that it would lower transport costs, ease inflation, and boost economic growth.

Meanwhile, IPMAN’s National Publicity Secretary, Chinedu Ukadike, highlighted the risks for marketers, recalling how Dangote’s entry into the diesel market in 2024 forced them to sell at a loss.

“That is why marketers fear lifting fuel because of the price scare. They will not want to suffer collateral losses,” he said.

Despite the challenges, stakeholders agree that competition in a deregulated market ultimately benefits consumers.

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