Imported Petrol Landing Cost Falls to N840 per Litre Despite Rising Pump Prices

Nigeria’s imported petrol landing cost has reportedly dropped to about N840 per litre, a decline influenced by the recent moderation in global crude oil prices and relative stability in foreign exchange rates. However, despite this reduction, pump prices across the country remain high, sparking renewed debate over the actual pricing mechanism and cost structure within the downstream petroleum sector.

Industry data and market analysts revealed that the decline in landing cost is primarily due to the fall in international oil prices, which have hovered between $83 and $87 per barrel in recent weeks, coupled with the slight strengthening of the naira against the U.S. dollar. As a result, the cost of importing Premium Motor Spirit (PMS), also known as petrol, has dropped from previous highs of over N1,000 per litre recorded during the peak of crude price and currency volatility.

However, the domestic pump price of petrol has not reflected this reduction, as retail prices remain between N855 and N900 per litre in most filling stations nationwide. This disparity, according to experts, underscores the continued inefficiencies in the fuel supply chain, distribution challenges, and regulatory uncertainties affecting the market.

According to industry sources, the total landing cost includes freight, insurance, port charges, storage, and transportation expenses, which often add up significantly to the final retail price. The Petroleum Products Pricing Regulatory Authority (PPPRA) had previously noted that logistics and operational costs contribute a major portion of the retail price, especially in inland states where transportation adds additional burdens.

Fuel marketers, while acknowledging the drop in landing costs, argue that multiple charges, poor infrastructure, and high distribution costs have eroded the benefits of cheaper importation. The Executive Secretary of the Major Oil Marketers Association of Nigeria (MOMAN), Clement Isong, explained that despite lower import costs, the market realities are shaped by several factors beyond crude prices alone.

“The cost of landing petrol has indeed reduced, but we still face other challenges such as high port levies, storage fees, and inland transport costs. These components make it difficult for the retail price to adjust downward immediately,” Isong said.

Independent marketers also expressed concerns about limited access to foreign exchange, which they claim forces many of them to rely on the parallel market for dollar purchases, thereby increasing their cost base. According to the Independent Petroleum Marketers Association of Nigeria (IPMAN), the fluctuation in exchange rates at the black market level often offsets any global price advantage.

In recent weeks, the naira has shown relative stability in the official market, trading around N1,470/$, while the black-market rate has hovered between N1,480 and N1,500. Analysts believe that sustained forex stability, alongside improved local refining capacity, could further lower landing costs and eventually translate to reduced retail prices.

Meanwhile, petroleum industry observers have urged the Federal Government to enhance transparency in the downstream sector and provide a clear pricing template that reflects global trends and local realities. Energy economist Dr. David Ihenacho stated that the current pricing regime remains opaque, leaving room for inefficiency and speculation.

He noted, “If the landing cost has dropped, Nigerians deserve to see a corresponding decrease in pump prices. The government should ensure that pricing reflects actual market conditions and not the interests of a few dominant players.”

On its part, the Nigerian National Petroleum Company Limited (NNPC Ltd) has maintained its role as the sole importer of petrol since the subsidy removal, but private sector participation is gradually increasing. Some marketers have started importing limited volumes, while the Dangote Refinery is also expected to begin large-scale supply soon.

The anticipated local supply from the Dangote Refinery, which began operations earlier in the year, could further ease pressure on importation and help stabilize prices. Industry experts believe that once the refinery achieves full production capacity, the local market will experience a decline in dependence on imported products, leading to better price alignment.

However, despite the optimism, consumers have continued to face the burden of high fuel prices, which have contributed to rising inflation and increased cost of living. The National Bureau of Statistics (NBS) recently reported that transportation, energy, and food remain key drivers of inflation, currently hovering above 18 percent.

Economic analyst Dr. Modupe Olawale explained that fuel price stability is central to managing inflation and restoring consumer confidence. “Any meaningful decline in the cost of petrol should ideally reflect at the pump to help ease inflationary pressures. The continued high prices suggest inefficiencies or profit-driven markups somewhere in the value chain,” she said.

The government has promised ongoing engagement with industry players to ensure fair pricing and supply efficiency. According to officials at the Ministry of Petroleum Resources, reforms under the deregulated market framework will soon yield visible benefits, including reduced price manipulation and improved product availability.

Nonetheless, many Nigerians remain skeptical, arguing that promises of deregulation and competitive pricing have not yet materialized in tangible relief. Long queues have disappeared in most cities, but the price burden persists, straining household budgets and small businesses alike.

With the festive season approaching, energy demand is expected to rise, putting more pressure on the distribution network. Experts have urged the authorities to act swiftly to prevent artificial scarcity and ensure that the benefits of the reduced landing cost reach consumers.

They also recommend that Nigeria accelerate its local refining efforts and invest in infrastructure such as pipelines, depots, and modular refineries to reduce dependence on imported fuel.

 

In summary, while the decline in petrol landing cost to N840 per litre offers a glimmer of hope, the expected relief for Nigerian consumers remains elusive. Until the nation addresses systemic inefficiencies, forex challenges, and logistics costs, the price at the pump may not mirror global or import cost improvements anytime soon.