Aliko Dangote, president of Dangote Industries Limited, said the company’s refinery cannot price petrol below the market because crude oil and logistics costs have increased. He made the comments in a television interview while explaining the pressures behind recent fuel-price adjustments.
Petrol pricing under pressure
- The refinery’s latest increase was made when the market price was N1,265 per litre.
- Importers could not sell at that level without suffering substantial losses, Dangote said.
- The company initially held off, expecting prices to decline, but eventually revised its own price after the market continued climbing.
Dangote said crude costs had also risen sharply. The refinery purchased crude in May at $124 per barrel, he said, adding that the business could not absorb all of the increase by effectively subsidising fuel sales.
He said the refinery could not offer petrol below the prevailing traded price because it was not receiving crude at a reduced rate. In his words, the company could not pass on a discount that it was not getting from its own suppliers.
Free distribution support
To limit the effect of higher petrol prices, Dangote said the company was providing transportation to several parts of Nigeria at no charge. Trucks were delivering fuel free of freight costs to Maiduguri, the South-East, the South-South and Lagos.
Consumers in remote destinations such as Maiduguri could save approximately N70 per litre through the arrangement, he said.
Dangote also disclosed that Dangote Industries had committed N1 trillion to acquiring 4,000 new tankers, each with a 50-litre capacity, to support the distribution of petroleum products without charging customers for transport.
He said the initiative would return N90 billion to consumers, amounting to more than N1 trillion annually, and was designed to soften the impact of rising fuel prices.
Crude transport costs
The refinery is also paying substantial premiums to move crude, Dangote said. Transporting crude from Focados to Lagos had at one point cost about $4 million for fewer than one million barrels, even though the journey would normally take roughly half a day.
He said the combined expense of buying crude at elevated prices and transporting it to the refinery was adding to the upward pressure on petrol costs.
