The Dangote Oil Refinery stands to lose N32.5bn following a recent petrol price cut, with the stock of 500 million litres now valued lower
[dropcap]T[/dropcap]he Dangote Oil Refinery is facing a significant financial setback, with a loss of up to N32.5bn on its stock of 500 million litres of Premium Motor Spirit (PMS) after a recent reduction in fuel prices.
Also read: Dangote refinery’s petrol price slash sparks tension among fuel importers
The price reduction has had a notable impact on the refinery’s projected income from its petrol stock, which had initially been priced at N890 per litre.
In a statement from Dangote Group, it was revealed that the refinery had more than 500 million litres of petrol in its tanks just before the price slash.
At the previous price of N890 per litre, this stock was valued at approximately N445bn. However, following a N65 price reduction, effective February 27, 2025, the new price per litre has dropped to N825, marking the second price decrease in just two months.
This reduction in prices directly impacts the refinery’s expected income, now lowering the value of the stock to N412.5bn. Consequently, the Dangote refinery will lose N32.5bn due to the price cut.
In its statement, the refinery outlined its ongoing commitment to easing the financial burden on Nigerians, citing the consistent reductions in the prices of petrol and other refined products.
Notably, during the holiday season of December 2024, the refinery had already reduced the price of PMS by N70.50, from N970 to N899.50 per litre.
The company claims these price cuts are part of its mission to provide relief to consumers, prevent fuel scarcity, and support the economy during challenging times.
However, this decision has not been without consequences. Experts suggest that the recent drop in crude oil prices and the slight strengthening of the naira could help the refinery recover some of its losses in the coming months. Nevertheless, the price reductions have created ripple effects throughout the fuel sector.
Fuel importers and marketers have voiced concerns over the impact of Dangote’s price cuts on their businesses, with some estimating losses of up to N2.5bn daily, or N75bn monthly, as a result of having to sell petrol below landing costs.
The consistent reduction in prices by the Dangote refinery is reportedly making the importation of fuel less profitable, prompting some marketers to sell with minimal or no margin.
Those holding older stock have been especially affected, having already bought petrol at higher prices before the price cut took effect.
Meanwhile, many filling stations across Nigeria have lowered their pump prices in response to the new ex-depot price, with stations in Lagos reporting prices as low as N860 per litre.
This price cut has sparked mixed reactions from Nigerians. While consumers are benefiting from lower prices at the pump, there have been calls for Dangote to increase the number of stations selling its products nationwide to ensure wider access to affordable fuel.
In addition, marketers predict that the price of petrol could drop even further in the coming months, with the landing cost of PMS now standing at N783.66 per litre.
If this trend continues, some forecasts suggest petrol prices may fall to N800 per litre.
Also read: Dangote sues FG, attempts to monopolise, regulate petrol importation
The Dangote Oil Refinery’s strategic moves to cut prices and challenge the market have certainly stirred debate.
Quadri Olaitan is a journalist and contributor to Freelanews.com, covering news, public affairs, and human-interest stories.
