By Abubakar Yunusa
Oil marketers have hinted that most vehicle owners who installed Compressed Natural Gas (CNG) as an alternative energy source may return to petrol as petroleum product prices continue to decline.
The marketers said operators that maintain efficient supply chains are likely to benefit from increased demand, as petrol prices have started declining following developments in the global crude oil market.
They also said they will now start receiving increased patronage at their filling stations due to lower petroleum product prices, with marketers who used to buy one truck of product now able to buy between 10 and 15 trucks.
The decline followed the recent peace deal between the United States and Iran, which pushed crude oil prices down from as high as $120 per barrel to about $77 per barrel.
Petrol prices in Lagos and surrounding areas have reduced from an average of N1,320 per litre at filling stations to between N1,199 and N1,245 per litre, while prices at major depots dropped from an average of N1,275 per litre to between N1,165 and N1,180 per litre.
Oil marketers said the decline in petroleum product prices could influence consumers who previously switched to alternatives such as CNG due to the high cost of petrol.
The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, said the Dangote Refinery, which is currently the major supplier of petroleum products in Nigeria, has adjusted its prices following the decline in crude oil prices.
“The recent drop in price of petroleum products was born out of the peaceful settlement between Iran and the United States and the opening of the Strait of Hormuz. Now that the supply is coming, now that the vessels are moving in, you are finding that the crude oil has started dropping because there is an increase in supply of crude oil.”
So now Dangote Refinery, which is the main supplier of petroleum products here in Nigeria because of its strategic nature, has also yielded to that international decrease by also reducing the petroleum products in line with the price of crude oil and factors of its refining here in Nigeria.”
“Most people install CNG tanks and use cylinders to run their small-scale businesses because of the cost of petroleum products. I also believe that now that petroleum products are coming down, they will revert back to petroleum products and abandon the CNG and LPG.”
Ukadike said the lower prices would create more competition among energy sources as consumers begin to reassess their options.
Another retail station operator, Mallam Darman Abdullahi, said the reduction in petrol prices presents both opportunities and challenges for petroleum marketers.
“Marketers who purchased products at higher prices before the reductions are experiencing inventory losses because they are now compelled to sell at lower rates.
“Lower prices are encouraging increased consumption as transportation and operating costs reduce.
‘Higher sales volumes could improve cash flow and turnover, although profit margins per litre may not necessarily increase.”
