The Dangote Petroleum Refinery has reduced its ex-gantry
price for premium motor spirit (PMS), also known as petrol, by N50.
The cut reduces the ex-gantry price to N1,075 per litre.
In a statement on Thursday, the company said today’s
reduction “is the fourth price cut in one month, bringing cumulative reductions
to above N200 per litre on PMS”.
Dangote refinery said the reduction in price is based on
actual production economics and inventory costs, not decline in global oil
price.
“This approach ensures that pricing decisions are anchored
on actual production economics and inventory costs rather than short term
fluctuations in international oil markets. Nigeria today benefits from the
stabilising role of domestic refining capacity,” the company said.
Over the same one-month period, Dangote refinery said it has
reduced the ex-gantry price of automotive gas oil (AGO), also known as diesel,
by N300 per litre and Jet A1 aviation fuel by N520 per litre.
The refinery explained that petroleum product pricing cannot
immediately mirror daily movements in international crude oil markets because
crude is purchased weeks or months before it is processed.
According to the statement, the products currently being
supplied to the market were produced from crude inventories acquired when
international prices were substantially higher.
The refinery disclosed that the average landing 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.
Dangote refinery also clarified that its crude procurement
costs are not based solely on the headline ICE Brent benchmark commonly quoted
in the media, but on a dated Brent basis alongside applicable market premiums,
freight, and logistics costs.
Despite the sharp increase in crude acquisition costs during
the period, the refinery said it deliberately refrained from transferring the
full financial impact to consumers, choosing instead to absorb a significant
portion of the additional costs to support market stability.
The company noted that this pricing approach has helped to
keep petroleum product prices in Nigeria below those prevailing in neighbouring
countries, even after accounting for applicable taxes.
Dangote refinery added that as lower-priced crude cargoes
progressively enter its production cycle, it has begun systematically passing
the benefits to the market through phased price reductions.
The petrol producer 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.
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