Diesel and aviation fuel prices are yet to budge in Nigeria after the recent price cut by the Dangote Refinery owned by Africa’s richest man.
The mega refinery, backed by Aliko Dangote, announced price cuts to diesel and aviation fuel prices Tuesday, but the market price of both products have stayed the same since then with marketers claiming they were still offloading old stock.
The delay is frustrating several businesses, including airlines, that can’t wait to buy the products at a cheaper rate.
Emeka Okafor, who runs a consulting firm in Lagos and relies on diesel generators due to persistent power outages, shared his frustration.
“Dangote announced a price cut, but when I ask my people to buy diesel, the price is still the same. How can we survive like this?” he asked.
Okafor explained that the high cost of diesel has forced him to raise his service fees, putting a strain on his customers’ wallets as well.
“The reasons behind the slow trickle-down effect are unclear. Some speculate that retailers are waiting to exhaust their existing stock bought at higher prices before offering the discounted rate,” Abubakar Lawal, a diesel truck driver who operates at independent marketers’ depot facilities at the Apapa terminal said.
High diesel prices
A survey by BusinessDay showed diesel was selling at an average rate of between N1,350/litre and N1,450/litre despite the price cut by the Dangote refinery.
In some fuel stations along the Ijegun axis of Lagos State, it was observed that the product sold for N1,350/litre.
An outlet belonging to Mobil along Isheri Ijegun road in Alimosho area of Lagos State sold the product for N1,350/litre.
A filling station of the Nigerian National Petroleum Company Limited along Egbeda-Idimu road also dispensed diesel at N1,350/litre on Wednesday.
TotalEnergies filling station at Isolo road also sold diesel at N1,350 while NNPC Ltd at Ikoyi Road sold diesel for N1,300.
Dangote had announced a partnership with MRS to distribute the products but most of the MRS stations surveyed by BusinessDay were not selling the product at the time of filing this report.
Aviation fuel
Apart from diesel, airfares across local destinations in Nigeria remain high as the price of aviation fuel has also stayed the same.
“Ticket prices have not been reduced at all. We still book tickets at a very expensive rate. All we just keep hearing is that aviation fuel price has reduced, yet ticket prices have not changed,” Ndukwe Ginika Ogechi, CEO Geena Travels And Tours Ltd also told BusinessDay.
Ogechi said that since aviation fuel constitutes a major operating cost for airlines, she expected that ticket prices will reduce but that has not been the case.
BusinessDay’s findings show that aviation fuel currently accounts for 45 percent of airlines operating costs, the single largest cash guzzler.
Data surveyed by BusinessDay showed when aviation fuel increased to N200 per litre, airlines operated a B737 aircraft at a cost of about $6,000.
Findings show that with the current exchange rate and increase in aviation fuel, which currently costs about N1,500 per litre, airlines operate a B737 aircraft for over quadruple that amount.
A one-way economy class ticket from Lagos to Abuja which cost N55,000 a few months ago now costs between N100,000 to N140,000 on Air Peace; N90,000 to N150,000 on United Nigerian Airlines; N75,000 to N130,000 on Dana Air and N150,000 to N190,000 on Ibom Air.
A one-way economy class ticket from Lagos to Abuja which cost about N50,000 some months back now costs N105,000 to N150,000 on Air Peace, N95,000 to N130,000 on United Nigeria Airlines, and N165,000 to N200,000 on Ibom Air.
A one-way economy class ticket from Lagos to Port Harcourt which cost about N55,000 some months ago, now costs N105,000 to N170,000 on Air Peace, N85,000 to N120,000 on United Nigeria Airline, N65,000 to N135,000 on Dana Air, N96,000 to N130,000 on Ibom Air and N86,000 to N160,000 on Arik Air.
An airline operator who would not want his name mentioned told BusinessDay that marketers sell to the airlines, as airlines cannot buy aviation fuel directly from Dangote since Dangote is not an authorised fuel marketer at the airport.
The operators said that while fuel prices are not fixed, the prices are dependent on volume discussion as airlines that buy more get some level of discount.
He however noted that the average price for aviation fuel is N1,500 per litre.
Marketers’ response
When asked to explain why marketers were still selling the commodity at between N1,350/litre and N1,450/litre, the Independent Petroleum Marketers Association of Nigeria (IPMAN) said it was because many dealers were still offloading the old stock which they bought at N1,225/litre.
“The price reduction by Dangote refinery will not reflect at the pumps immediately because he started selling at the rate of N1,225/litre. Many marketers bought at that price and are still selling that stock,” Abubakar Maigandi, national president of IPMAN said.
He added, “So there is no way they can be able to reduce the price to below their cost price. But with time, the price of the product at the filling stations will reduce and normalise.
Tunde Ayeni, an oil marketer with a major depot said the reduction in prices from Dangote refinery won’t be seen at the pumps for now because most marketers have stocks they bought at N1,225/litre.
“With time, the price will drop. Already, pump price has dropped from N1,600 per litre to around N1,300 to N1,350, depending on the location, so it will take a bit more time,” he said.
Dangote crashes prices
The Dangote Petroleum Refinery, on Tuesday, announced a further reduction in the prices of diesel and aviation fuel to N940/litre and N980/litre respectively.
The price change of N940 applies to customers buying five million litres and above from the refinery, while the price of N970 is for customers buying one million litres and above,” the firm stated in a statement issued by its spokesperson, Anthony Chiejina.
He explained that the new price aligned with the company’s commitment to cushion the effect of the economic hardship in Nigeria.
“I can confirm to you that Dangote Petroleum Refinery has entered a strategic partnership with MRS oil and gas stations to ensure that consumers get to buy fuel at affordable prices in all their stations, be it Lagos or Maiduguri,” Chiejina stated.
He further noted that the partnership would be extended to other major oil marketers.
Additional reporting by Ifeoma Okeke-Korieocha & Faith Esfiho
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