The Nigerian National Petroleum Corporation (NNPC) on Wednesday, May 6, 2020, reduced the ex-depot price of petrol to N108 per litre from N113.28 per litre, but filling station would continue selling fuel at N125 per litre as oil marketers are not willing to change the price anytime soon.
The ex-depot price is the price that petroleum products depot owners or terminal operators sell to marketers. This price determines fuel price at the filling station. When ex-deport price drops, pump price drops as well. But according to the Vice President, Independent Petroleum Marketers Association of Nigeria, Abubakar Maigandi, oil marketers won't be inputing the change announced by NNPC in their price immediately.
Why oil marketers are not reducing price
While explaining the reason for the delay in reducing the price, Maigandi said oil marketers will have to sell their old stock which had been acquired with the old price; until then, Nigerians will have to continue purchasing fuel at the old price. He said oil marketers can't accelerate the change as quickly as Nigerians might want.
“The new ex-depot price shows that there is an achievement based on the call for petrol price reduction and right now, both marketers and consumers will be happy. This may probably lead to a market situation where we will see a little increase in demand.”
Adding that, “The moment you get a reduction in ex-depot price, definitely there will be a corresponding reduction in pump price. But the reduction in pump price will not be as urgent as consumers want it to be because most of the marketers still have old stock. They have to finish their old stock before effecting a reduction in pump price.” He told Punch.
New price haven't been decided
When the oil marketers sell off their old stock, the price is expected to drop then, but Maigandi said the new price hasn't been communicated to the oil marketers by the Petroleum Products Pricing Regulatory Agency. He stated that it isn't the duty of the oil marketers to decide the cost of the petrol, “We are waiting for the PPPRA to give the update because they are the ones in charge of products pricing,” he stated.
Why did NNPC reduce ex-deport price
The reduction of ex-deport price is a market strategy by NNPC to ensure sales volume of litres of petrol currently in storage increase, and customers get to purchase fuel at a cheaper price. Note that oil price had crashed due to the COVID-19 impact on global oil market, as well as the oil price war between Saudi Arabia and Russia.