Abayomi Susan
…Domestic pricing strategy shields consumers from import-driven cost increases
The Dangote Petroleum Refinery & Petrochemicals has continued to protect Nigerian consumers from the impact of rising global fuel prices by maintaining relatively stable domestic petroleum product prices despite increasing international gasoline costs, higher freight charges and tightening global supply conditions, according to market intelligence from S&P Global Commodity Insights.
The latest assessment by S&P Global Commodity Insights revealed that fuel importers serving the Nigerian market are facing growing pressure due to rising international gasoline prices, with traders attributing the increase to higher global product values and escalating shipping expenses.
Market participants disclosed to S&P that domestic gasoline prices in Nigeria are effectively being “capped by Dangote prices”, limiting the ability of importers to transfer rising international costs to Nigerian consumers.
A trader noted that while gasoline meeting Ghanaian specifications currently attracts higher premiums, Nigerian specification cargoes remain under pressure because Dangote Refinery has maintained its coastal sales prices despite increases in global market costs.
“Lomé values have risen above Dangote sales prices, which has shut the arbitrage,” the trader was quoted as saying, indicating that importing petroleum products into Nigeria has become increasingly challenging under current market conditions.
The development comes amid a significant rise in global freight costs. According to S&P Global, the cost of shipping clean petroleum products from Northwest Europe to West Africa increased from $29.70 per metric tonne at the end of June to $37.12 per metric tonne, as vessels are redirected to meet demands in alternative markets.
Meanwhile, diesel markets across the region have experienced tighter supply conditions following reduced availability of Russian Black Sea cargoes, pushing up prices of high-sulphur gasoil and further increasing importation costs.
Despite these international market pressures, Dangote Petroleum Refinery has maintained its commitment to gradual price adjustments in favour of consumers.
Since late May, the refinery has reduced the ex-depot price of Premium Motor Spirit (PMS) by over N200 per litre, Automotive Gas Oil (AGO) by N300 per litre, and Jet A1 aviation fuel by N520 per litre, even as it continues to process crude purchased at significantly higher international prices.
The refinery has consistently explained that its pricing model is based on actual crude acquisition costs rather than daily fluctuations in global Brent crude prices, noting that crude supplies are typically purchased weeks or months ahead under commercial agreements tied to monthly average pricing arrangements.
Industry analysts have described the latest market trend as further evidence of the strategic importance of domestic refining capacity in protecting Nigeria from external supply disruptions.
They noted that without the Dangote Refinery operating at full scale, rising global product prices, increased freight charges and higher regional trading hub prices could have resulted in significantly higher petrol prices for Nigerian consumers.
The S&P Global assessment also highlights the growing influence of Dangote Refinery on petroleum pricing across West Africa, with market participants increasingly viewing its prices as a regional benchmark.
Analysts explained that importers are finding it difficult to compete whenever international replacement costs exceed the refinery’s domestic pricing structure.
They added that the development reflects one of the major objectives behind the establishment of the 700,000 barrels-per-day refinery — reducing Nigeria’s dependence on imported fuel, conserving foreign exchange, strengthening energy security and ensuring greater price stability for households and businesses.
As global fuel markets continue to face pressure from geopolitical uncertainties, supply constraints and rising transportation costs, the Dangote Petroleum Refinery is emerging not only as Nigeria’s major source of refined petroleum products but also as a stabilising force for the wider West African energy market.
