The gantry price of Premium Motor Spirit (PMS), otherwise known as petrol, has been cut down by Dangote Petroleum Refinery and Petrochemicals by N50 to N1,075 per litre from N1,125 per litre.
The company announced this reduction in a statement on Thursday, saying this move was to make the product available to consumers at lower prices.
The refinery explained that petroleum product pricing cannot mirror daily movements in international crude oil markets because crude is purchased weeks, and sometimes months, before it is processed.
According to the refinery, the petroleum products currently being supplied to the market are being produced from crude inventories acquired during periods of substantially higher prices.
It disclosed that the average landed cost of crude processed stood at approximately $124.80 per barrel in May and $95.25 per barrel in June, compared with the current international benchmark of about $71.01 per barrel.
The Lagos-based refinery also clarified that its crude procurement costs are not based solely on the headline ICE Brent benchmark commonly quoted in the media.
Rather, crude is purchased on a Dated Brent basis together with applicable market premiums, freight and logistics costs, resulting in actual feedstock costs that differ materially from benchmark prices.
Despite the sharp increase in crude acquisition costs during the period, Dangote Refinery said it deliberately refrained from transferring the full impact to consumers, choosing instead to absorb a significant portion of the additional costs in order to support market stability and cushion Nigerians from the volatility in global energy markets.
“[The latest] N50 per litre reduction is the fourth price cut in one month, bringing cumulative reductions to above N200 per litre on PMS. This approach ensures that pricing decisions are anchored on actual production economics and inventory costs rather than short-term fluctuations in international oil markets,” it said.
“Nigeria today benefits from the stabilising role of domestic refining capacity. The Dangote Petroleum Refinery currently supplies volumes sufficient to meet national demand, helping to strengthen energy security, eliminate dependence on imports, conserve foreign exchange and provide greater price stability for consumers and businesses,” it added.
The company expressed confidence that if international crude prices remain favourable and lower-cost feedstock continues to replace higher-priced inventories, Nigerians should expect further moderation in petroleum product prices.
