Fuel Price Cut Delayed At Pumps Due To Supply Logistics

Juliet Oladele, Reporting

THE RECENT reduction in the ex‑depot price of petrol by Dangote Refinery has yet to reach retail filling stations across Nigeria, owing to a combination of supply logistics, stock‑holding costs and the need to blend existing inventory, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has explained.

Speaking on Channels Television’s The Morning Brief on Wednesday, PETROAN President Billy Gilly‑Harry said local pump prices are shaped by multiple factors beyond the refinery gate.

“Prices reflecting are dependent on availability, cost, and preparing the particular petroleum to be delivered to the people,” he stated.

When pressed on why price increases are felt almost immediately while decreases lag behind, Mr Gilly‑Harry pointed to the realities of supply management.

“It is mainly affected by whether the producer has additional resources or not at the time. Increases in prices are mainly caused by the need to restock. There must be that advantage pushing the price upward to be able to pay for new supplies,” he explained.

Asked whether existing stock must be exhausted before a price drop can occur, the PETROAN president acknowledged that this is generally the case.

“That’s the basic idea. But in petroleum, a mixture is involved, and loss is taken, though not in a way that affects the capital needed to restock,” he noted.

Contributing to the discussion, energy analyst Olabode Sowunmi highlighted the broader complexities behind Nigeria’s fuel pricing.

He stressed that while global crude oil prices are often seen as a major determinant, their influence is not always direct in the Nigerian context.

“Global price of crude oil is a factor but a factor internationally and not necessarily in Nigeria,” he said.

Mr Sowunmi pointed to the Dangote Refinery’s arrangement, which, as a primary supplier, has agreements to allocate a percentage of its crude for

Nigeria at a fixed price pegged in naira. This means local pricing is not always tied to international fluctuations.

“So basically the issue will have to be from the point of refinery to where it touches the final person,” he said.

He further clarified that international prices would only play a dominant role if global markets had a predominant impact on Nigeria’s supply chain.

“So basically our cost issues in terms of reflecting to the final person deal with our own logistics rather than the geopolitics that is taking place at the moment,” he stated.

When asked why internal logistics seem to matter more during price increases than decreases, Mr Sowunmi acknowledged that the reasons vary but ultimately depend on the seller.

“There could be various reasons, but it all comes down to the seller,” he said, underscoring the role of market behaviour in shaping consumer experiences.

Despite these challenges, Mr Gilly‑Harry emphasised the broader mission of the sector: “Petroleum is concerned with making Nigeria better.”

The Dangote Petroleum Refinery & Petrochemicals announced a reduction in ex‑depot prices two weeks ago, cutting Premium Motor Spirit (petrol) to N1,250 per litre from N1,275, and Automotive Gas Oil (diesel) to N1,700 per litre from N1,800.

The company said the adjustment underscored its commitment to affordability and economic support, but industry stakeholders maintain that the full benefit will only reach motorists once existing stocks are cleared and new supplies at the lower price enter the distribution chain.