Dangote Refinery cuts fuel prices again, signals further moderation

Dangote Petroleum Refinery & Petrochemicals has implemented another reduction in its ex-depot price for Premium Motor Spirit (PMS), lowering it by N50 per litre. This marks the fourth price cut within a month, bringing the total decrease to N200 per litre since May 30 and setting the gantry price at N1,075. The refinery has also reduced prices for Automotive Gas Oil (AGO) by N300 per litre and Jet A1 aviation fuel by N520 per litre over the same period. These successive reductions underscore the refinery's commitment to passing on favorable market developments and ensuring the long-term sustainability of domestic refining. The company stated that petroleum product pricing does not mirror daily international crude oil market fluctuations because crude is purchased weeks or months in advance. The products currently supplied are from crude inventories acquired at substantially higher prices, with average landed crude costs at approximately $124.80 per barrel in May and $95.25 in June, compared to the current benchmark of about $71.01. Dangote Refinery clarified that its crude procurement costs differ from commonly quoted benchmarks due to factors like premiums, freight, and logistics. Despite increased crude acquisition costs, the refinery has absorbed a significant portion to support market stability and cushion Nigerians from global energy market volatility. This approach has helped keep Nigerian prices below those in neighboring countries. As lower-priced crude cargoes are progressively incorporated into its production cycle, the refinery is systematically passing these benefits to the market through phased price reductions, anchoring pricing decisions on actual production economics and inventory costs.

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Today’s 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.