Sopuruchi Onwuka

Nigeria’s dominant fuel producer, Dangote Petroleum Refinery says it has reduced gantry price for petrol and diesel by some N100 per liter even as the prices remain very high in the face if the prevailing oil supply crisis arising from Iran war.

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The reduction which the company said it made on March 10 is yet to reflect at the retail pumps where prices remained at a range between N1250 and N1400 per liter at different filling stations in Lagos.

A statement from the company linked the reduction to fluctuating price trends in the international market where the price for prime crude oil grades fell from $120 per barrel on Monday to less than $90 per barrel on Tuesday.

Dangote stated that it reduced its gantry price for petrol from N1175 to N1075 per liter; and coastal price for petrol was reduced from N1150 to N1028 per liter. Gantry price for diesel, according to Dangote, has been reduced by N190 per liter from N1620 to N1430 per liter.

“This decision is intended to assure Nigerians that the pricing mechanism remains responsive to global market dynamics and indicative of our fair pricing system,” the company declared in the statement.

The refinery denied any cost incentive on its production inputs, saying that it buys crude oil at prevailing market prices while its foreign exchange transactions remain at prevailing market benchmarks “with no subsidy in both crude and forex.”

The company stated that although it enjoys government’s crude for Naira incentive, the commodity is priced according to global foreign exchange benchmarks plus premium before conversion to Naira.

The company pledged commitment to Nigeria public, assuring that it would continue to spread the benefits of its operations to every section of the country.

Oracle Intelligence reports that government’s incentives of domestic crude supply obligation and Naira for crude policies are intended to weed out import costs and foreign exchange burden for domestic refiners.

Charter rate for ocean going tankers and crude oil carriers range from $100,000 to $170,000 per day while cost of forex is determined by availability and prevailing exchange rate. Forex costs, tanker rates, insurance, port charges and sundry freight associated risk premiums form key components of import price templates.

Experts believe that the combination of domestic refining, crude for Naira policy and domestic feedstock supply obligation should form strong shield for the Nigerian domestic fuel market against price turbulence impinging from the international oil markets.