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Dangote’s Diesel Sales Bring Hope for Manufacturers



The introduction of diesel from the Dangote Oil Refinery and Petrochemical Plant has led to a significant drop in prices, offering hope for Nigerian industries, according to DARE OLAWIN

The entrance of diesel from the $20 billion Dangote refinery into the local market has contributed to the current reduction in prices in Nigeria. This is expected to lower production costs.

Reports show that the pump price of Automotive Gas Oil has fallen from around N1,700 per liter a few weeks ago to about N1,350 per liter in various parts of the country due to Dangote’s refinery sales.

Recently, the $20 billion refinery commenced supplying diesel to the domestic market, with each registered oil marketer receiving a minimum of 1 million liters. The price per liter ranged from N1,225 to N1,300 based on purchase volume, with plans to release Premium Motor Spirit in May.

Industry officials and oil dealers have affirmed the supply of diesel at reduced prices from the Dangote refinery, which is expected to drive down costs further. The National President of the Independent Petroleum Marketers Association of Nigeria, Abubakar Maigandi, noted the positive impact of this move on diesel prices.

Maigandi mentioned that the diesel price is expected to decrease due to the refinery’s products entering the market, an improvement already observed in Lagos.

Feedback from various locations like Ogbomoso, Badagry, and Abeokuta indicated differing diesel prices, with fluctuations tied to the refinery’s impact. Data also highlighted the rise in diesel prices from January to March 2024.

With the rise in diesel costs amplifying financial pressures on businesses, especially amidst low public supply, there were concerns about the knock-on effects on goods and services.

Manufacturers, who heavily rely on diesel for operations, noted a significant chunk of their costs being allocated to energy. The spike in energy expenses in 2023 compared to 2022 underlined the challenges faced by industries.

Anticipation looms among Nigerians for potential price adjustments in products following the diesel price dip, as businesses eye improved operational efficiencies.

While cautious optimism persists, discussions among industry stakeholders emphasize the importance of sustainable solutions to drive down costs and enhance profitability for businesses.

Key reforms like ramping up refinery operations, exploring alternative energy sources like natural gas in local currency, and promoting renewable energy options reflect strategies to mitigate energy costs for industries.

In a bid to reduce running expenses, shifting towards compressed natural gas has been proposed by experts, highlighting potential cost savings for businesses.

The reduction in diesel costs has sparked hope for a more sustainable business environment, with potential long-term benefits for industries.