Petrol near N1,400 as Dangote defends price hikes

Petrol is selling for as much as N1,400 per litre in Nigeria after Dangote Petroleum Refinery raised its gantry price for the third time in eight days.

Prices stood at about N1,310 per litre in Lagos and Ogun states, while consumers in northern states and areas farther from the refinery paid N1,350 or more. The latest increase lifted Dangote’s gantry price by N65, from N1,200 to N1,265 per litre, effective Aug. 29.

The increases have drawn criticism because international crude prices were falling. A senior Dangote executive defended the refinery’s pricing, saying current crude benchmarks do not determine the cost of crude already bought and awaiting processing.

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If you want to buy crude at today’s price, when do you think you will complete the actual transaction to purchase the crude?

“If you want to buy crude at today’s price, when do you think you will complete the actual transaction to purchase the crude? When will you get a laycan? When can you get a ship chartered and a charter party agreement signed?” the executive said. He added that the refinery also had to account for expensive crude purchased earlier and stored in its tanks.

Dangote first raised its gantry price from N1,165 to N1,185 on Aug. 21, then to N1,200 five days later. The three increases added N100 per litre, or about 8.6%, to the gantry price. The refinery’s coastal PMS price also rose from N1,582,380 to N1,669,545 per metric tonne.

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And what will happen to the huge quantities of expensive crude that you bought long ago and stored in the tanks? These are the factors determining the change in prices, not an immediate crude price change.