The Major Energy Marketers Association of Nigeria (MEMAN) has announced a slight reduction in the landing cost of Premium Motor Spirit (PMS), commonly known as petrol. As of December 2024, the cost has declined to ₦970 per litre, down from ₦971 per litre in November 2024.
This development aligns with a drop in global crude oil prices, which fell from $74 per barrel last week to $73.77 per barrel as of yesterday. MEMAN, in its daily energy bulletin, highlighted that the latest landing cost figures are calculated using an exchange rate of ₦1,533.57 per dollar and a crude oil price of $73.91 per barrel (Brent).
Volatility in Pricing Influences
Despite this minor drop, MEMAN warns that international petroleum product pricing remains highly volatile due to various geopolitical and economic factors. These include ongoing events in the Middle East, shifts in China’s market dynamics, and the impact of the recent U.S. elections.
The association further noted:
“The foreign exchange rate is also experiencing volatility. Landing cost, being fundamentally influenced by these elements, is likely to change several times intra-day.”
Retail Prices Remain Stable
Although the landing cost has decreased, the retail price of petrol remains steady at ₦1,025 per litre in Lagos. According to Ehimen Joseph, Chairman of the Lagos State Chapter of MEMAN:
“The price of petrol is determined by market forces under a deregulated market regime. A drop in price is possible.”
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), also emphasized that any reduction in petrol prices would take time to reflect in the market. He explained:
“Fuel price reduction cannot be spontaneous. Marketers need to deplete their existing stocks before new prices are reflected. This process could take one to two months, depending on stock levels and sustainable foreign exchange rates.”
Conclusion
While the drop in landing costs hints at a potential reduction in retail petrol prices, market forces and foreign exchange fluctuations will determine the timing and scale of any adjustments.
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