Current Market Situation

Import Statistics (Oct 1 - Nov 11, 2024)

- Total petrol imports: 1.5 million metric tonnes (~2 billion litres)

- Diesel imports: 414,018 metric tonnes

- Jet fuel imports: 13,500 metric tonnes

Port-wise Distribution (October)

- Lagos: 555,121 metric tonnes

- Warri: 281,100 metric tonnes

- Port Harcourt: 94,224 metric tonnes

- Calabar: 64,000 metric tonnes

Dangote Refinery Performance

- Current stock: 500 million litres of petrol

- Actual delivery (Sept 15 - Oct 5): 148 million litres

- Expected delivery by NNPCL: 575 million litres

- Capacity potential: 650,000 barrels per day

Market Dynamics Analysis

Price Competition Challenges

1. Market Inefficiencies

   - Higher Dangote Refinery prices creating market resistance

   - Marketers preferring cheaper imports despite domestic availability

   - Potential pricing strategy misalignment with market realities

2. Operational Issues

   - Significant gap between capacity and actual production

   - Logistical hurdles affecting distribution

   - Delivery shortfall against NNPCL expectations

Economic Implications

1. Currency Impact

   - Continued pressure on Naira (₦1,740/$ parallel, ₦1,652/$ official)

   - Foreign reserve depletion from sustained imports

   - Circular effect: currency weakness → higher import costs → more pressure

2. Market Inefficiencies

   - Double infrastructure burden (import + domestic)

   - Underutilization of domestic refining capacity

   - Higher end-user costs due to market fragmentation

Critical Challenges

1. Pricing Mechanism

   - Dangote Refinery's pricing strategy may need review

   - Market resistance to higher domestic prices

   - Need for competitive pricing against imports

2. Operational Efficiency

   - Production capacity utilization issues

   - Distribution network limitations

   - Supply chain optimization needs

3. Policy Framework

   - Lack of clear import substitution strategy

   - Regulatory environment not fully supporting domestic production

   - Need for balanced approach to market intervention

Strategic Recommendations

1. Short-term Actions

   - Review Dangote Refinery's pricing strategy

   - Optimize distribution networks

   - Enhance coordination between NNPCL and domestic refiners

2. Medium-term Solutions

   - Develop import substitution incentives

   - Strengthen domestic supply chain

   - Implement gradual import reduction strategy

3. Long-term Strategies

   - Invest in distribution infrastructure

   - Create policy framework favoring domestic production

   - Develop export capacity for regional markets

Market Outlook

Positive Factors

- Domestic refining capacity exists

- Potential for self-sufficiency

- Infrastructure development ongoing

Risk Factors

- Continued currency pressure

- Market preference for imports

- Operational inefficiencies

Critical Success Factors

1. Price competitiveness of domestic production

2. Distribution network efficiency

3. Policy support for domestic refiners

4. Currency stability