EBC Financial Group has questioned the timing and scale of recent petrol price increases by the Dangote Petroleum Refinery, saying the refinery’s explanation that the hikes reflected the cost of crude oil purchased weeks earlier does not fully align with the pattern of the increases.
According to an analysis by EBC, Dangote raised its ex-gantry Premium Motor Spirit (PMS) price three times within nine days in August, with the price moving from N1,165 per litre to N1,185, then N1,200 and finally N1,265.
The successive increases amounted to N100, representing an increase of about 8.6 per cent within the period.
EBC noted that the increases came in different sizes — N20, N15 and N65 — with the two largest adjustments occurring while international crude prices were still declining.
David Precious, Senior Market Analyst at EBC Financial Group, said an explanation based on the cost of crude already purchased would ordinarily be expected to correspond with when the more expensive crude entered the refining process and with the size of the resulting cost difference.
“An explanation based on stored crude cost should predict one increase, sized to the gap between old and new cost, timed to when the costlier oil entered the refining process,” Precious said.
He added that the sequence of three increases over nine days had not fully explained the timing or size of the adjustments.
“That does not make the explanation false; it has yet to account for the timing or the size of the increases,” he said.
Crude Prices Fell as Petrol Prices Rose
EBC’s analysis pointed to the movement in global crude prices during the same period as one of the issues raising questions about the explanation.
Brent crude reportedly fell from about $95 per barrel on August 21 to around $86 by August 26, representing a decline of nearly 10 per cent in five trading days.
Despite the fall in crude prices, Dangote subsequently increased its petrol price to N1,265 per litre on August 29.
The analyst noted that Brent did not rise above $90 per barrel again until August 31, two days after the N65 increase had taken effect.
The later rebound in crude prices followed reports of US-Iran military action that heightened concerns over oil shipments through the Strait of Hormuz.
EBC said the subsequent rise in crude prices could potentially explain a future adjustment, but not the N65 increase that had already taken effect.
Import-Parity Gap Raises Further Questions
The analysis also examined Dangote’s price against an import-parity benchmark.
According to the Major Energies Marketers Association of Nigeria’s August 27 Energy Bulletin, Dangote’s gantry price was N1,200 per litre, compared with an estimated spot import-parity price of N1,222.32.
That meant the refinery was pricing about N22 below the estimated level required for an importer to compete at the time.
Two days later, however, Dangote’s price had risen to N1,265 per litre — about N43 above that earlier reference point.
EBC cautioned that the comparison does not establish whether the N1,265 price was excessive because there was no live, published benchmark available to determine exactly how import-parity costs changed during those two days.
Instead, the analysis raised a broader question about how external observers can determine whether individual price increases correspond to changes in actual production or replacement costs.
NNPC Also Increased Its Prices
The report further noted that the Nigerian National Petroleum Company Limited (NNPC) followed Dangote’s increases within days.
NNPC’s Abuja petrol price increased by N20 from N1,250 to N1,270 per litre, while its Lagos price moved from N1,210 to N1,225.
Chinedu Ukadike, national publicity secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), reportedly said retailers had little choice but to increase their pump prices when their own costs increased.
EBC stressed that the similar movements did not prove coordination between the suppliers.
Rather, it showed how quickly changes in refinery and replacement costs can pass through the downstream petroleum market, particularly in a market where Dangote has become a major source of locally refined petrol.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) also identified crude sourcing, single-source domestic refining, refinery delivery timelines, logistics and transportation costs among factors contributing to petrol-price volatility.
EBC said this makes refinery-specific disclosure more important because movements in crude prices alone may not explain every change in pump prices.
EBC Calls for Greater Cost Transparency
EBC said one way to resolve the uncertainty would be for the refinery to provide a cost breakdown alongside each major price adjustment.
Such information could include the particular crude cargo involved, when it was purchased, the price paid for it and when it was delivered to the refinery.
According to EBC, this would allow marketers, regulators and potential minority shareholders to independently assess whether a particular price adjustment corresponds with changes in input costs.
The issue could become increasingly relevant as Dangote prepares for a reported stock market listing at a valuation approaching $40 billion.
EBC’s analysis said that without greater disclosure, future price adjustments could continue to generate questions because outside observers would have limited means of determining whether increases reflect genuine changes in costs or wider changes in refinery margins.
Diesel Price Also Increased
The refinery has since made a separate adjustment to diesel prices.
On September 4, Dangote increased its ex-gantry Automotive Gas Oil (AGO) price from N1,750 to N1,850 per litre, representing a N100 or 5.7 per cent increase.
The diesel adjustment was separate from the three August petrol price increases.
As of September 7, the refinery’s petrol gantry price remained at N1,265 per litre, according to the market data cited in the EBC report.
The debate over the pricing of locally refined petroleum products comes as the Federal Government and Dangote Refinery have repeatedly maintained that increased domestic refining and the naira-for-crude arrangement should reduce Nigerians’ exposure to fluctuations in international oil prices.
EBC’s analysis, however, suggests that greater transparency around the cost structure behind each adjustment would help investors, regulators and consumers better understand how those prices are determined.
