– As Brent hits $90/litre
OpeOluwani Akintayo
Lagos — Oil marketers have increased the price of Automotive Gas Oil, also known as diesel to between N355-N360 per litre, SweetcrudeReports has learnt.
Diesel is used by especially manufacturers to power their generators. Many transportation vehicles also use diesel.
Price of the product as at January had increased to N350 per litre in some filling stations in Lagos.
Market survey as of Wednesday saw the likes of Mobil filling station selling the product for N360 per litre, while Oando, ENYO and Fatgbems filling stations sold it for N355.
Unlike petrol, prices of diesel is not regulated by the government, leading to a by 60 percent in one year from an average price of N225 per litre in January 2021.
The development comes following an upturn in global crude oil prices that pushed the landing cost of Premium Motor Spirit, PMS or petrol imported into Nigeria to over N282 per litre.
The landing cost of petrol rose to N282.29 per litre on January 20 as the international oil benchmark, Brent crude, jumped to $89.75 per barrel that day from $77.24 per barrel on December 31, 2021.
Brent rose further on Wednesday to $90.22 per barrel as of 5.19PM Nigerian time, its highest since 2014.
The rising price of crude oil pushed the cost of petrol quoted on Platts to $837.75 per metric tonne (N260.09 per litre, using the I&E rate of N416.33/$1) on January 20, 2020 from $754.75 per MT on December 31, 2021, with a freight cost of $26.77 per MT (N8.31 per litre).
Other cost elements that make up the landing cost include lightering expenses (N4.81), Nigerian Ports Authority charge (N2.49), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N2.17).
The pump price is the sum of the landing cost, wholesaler margin (N4.03), admin charge (N1.23), transporters allowance (N3.89), bridging fund (N7.51), marine transport average (N0.15), and retailer margin (N6.19).
Analysts at CSL Stockbrokers Limited, in a report on Tuesday, said, “While it remains unclear by how much the commencement of active local refining will reduce the landing cost of petrol, the Chairman of Dangote Group, Aliko Dangote, recently disclosed that the refinery would begin operation in Q3 2022, starting with a capacity of 540,000bpd.
“Nigeria’s daily demand for refined crude oil was estimated at 442,000bps in 2018, which still comes below the proposed initial capacity of 540,000bpd. Many other modular refineries are also expected to come on stream. Beyond a possible reduction in the landing cost of petrol, achieving self-sufficiency in refining petrol will help conserve the country’s scarce FX,” the report said.
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