Price War: Marketers Form Partnership to Reduce Losses as Dangote, NNPC Crash Fuel Cost

• Nigerian fuel marketers are forming strategic partnerships to reduce losses and maintain steady product distribution amid volatile petrol prices
• Independent marketers are pooling resources to buy smaller truckloads, allowing them to sell quickly and avoid losses caused by frequent price cuts
• Petrol marketers urges the government to ensure all state-owned refineries operate efficiently to prevent monopolies in the downstream petroleum sector

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Nigerian fuel marketers are forming strategic partnerships in response to the increasing pressures of volatile petrol prices to reduce losses, protect the viability of their businesses, and ensure consistent product distribution throughout the nation.

Over the past three to four months, Dangote Refinery and NNPC Retail Limited, two of the biggest companies in the petroleum downstream value chain, have been engaged in fierce competition to capture the largest portion of the fuel market by periodic price reductions at the gantry and at the pumps.

While Dangote Refinery has partnered with a number of large retailers, such as Ardova Petroleum, MRS, Heyden, Optima Energy, Techno Oil, and Hyde, to offer products at lower prices than those found at other retailers, NNPC Retail Limited has also responded to Dangote's price reductions by lowering its own prices.

The majority of Dangote Refinery partners currently sell petrol at N875 per litre, while NNPC Retail Limited outlets offer it for N870 per litre.

Customers now have a variety of retail stores to choose from at prices that meet their budgets, so the trend appears to be in their favour.

Nonetheless, the pricing war and frequent fluctuations in petrol prices continue to be significant deterrents for gasoline marketers, particularly independent marketers who have lost substantial amounts of money as a result of these adjustments.

Speaking to Daily Sun, Mr Chinedu Ukadike, Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), discussed the implications of the frequent changes in the retail pump price of petrol.

He stated that although the price fluctuations are a positive aspect of the liberalisation of the petroleum downstream sector, they also present their own set of challenges.

A new cooperative channel has been established, he said, whereby three petroleum product marketers pool their resources to buy a truckload of roughly 45,000 litres, as opposed to the custom of one marketer buying the entire truck, in order to help marketers stay in business.

According to him, the plan is intended to minimise losses because dispensing 15,000 litres takes fewer days than 45,000 litres.

“We are doing this to tame losses so that by the time Dangote or NNPC decide to change their petrol prices, our members will have finished selling the 15,000-litre volume purchased.

“This is an era where you buy what you can quickly sell and make do with the small margin before returning to make fresh orders. If you decide to buy in larger quantities now, I can assure you that the marketer would run into massive losses, because before you finish selling that volume, the bigger players might have slashed prices.”

Ukadike urged the federal government to ensure that all four state-owned refineries are running at maximum efficiency in order to avoid a monopolistic market in the downstream petroleum industry.

Nigerian customs announces sale of N400/litre petrol

Legit.ng reported that Nigeria Customs Service (NCS) Comptroller General Adewale Adeniyi has authorised the immediate auction of confiscated petrol at a discounted price of N10,000 per 25-litre jerrycan. This means a litre of the petrol will be sold at N400/litre.

The product was seized over the weekend by the agency’s task force, Operation Whirlwind, which confiscated petrol valued at over N63 million in the Lagos-Ogun axis, Daily Sun reported.

The National Coordinator of Operation Whirlwind, Assistant Comptroller General (ACG) Hussein Ejibunu, praised the seizure as a significant victory in the battle against economic sabotage during a press briefing at the Customs Training College in Ikeja, Lagos, over the weekend.

Source: Legit.ng