With the deepened levels of uncertainty in Nigeria's energy sector and the unfortunate televised back and forth between the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and Dangote Petroleum (a key local refining player), the above must be one question on the minds of many Nigerians. There is logically very little room for optimism and it is very glaring that the Premium Motor Spirit (PMS) price downward shift (if it will ever be soonest) will be marginal. This assertion is hinged on 4 core signals which will be further dissected. One can't project the likely reduction subject to a defined time frame, however going by the over 30% reduction of diesel (AGO) pump price riding on the injection of locally refined diesel from the Dangote refinery, one may be tempted to project price reduction of PMS to 350-450 Naira levels. I wouldn't expect a linear relationship in the reduction of PMS when locally refined PMS comes on stream because PMS is a key political subject that goes beyond market dynamics and energy market realities.

One thing looking inevitable is the reduction of the pump price of PMS, but it will do Nigerians good to lower their expectations as many Nigerians are very hopeful of a crash to pre-subsidy removal levels as demanded in the ongoing protests spread nationwide. So let's talk signals to back our position.

Signal 1: Subsidy removal amongst other things is seemingly an adopted strategy by this administration to combat the smuggling of PMS across the west-coast nations of Africa.

Our take: Aside from the obvious solution of tightening border security, why isn't the Nigerian National Petroleum Corporation Limited, NNPCL considering expanding legitimate energy trade between Nigeria and her west African neighbors to combat smuggling? Smuggling is real and this was well captured in the drop of daily PMS consumption in Nigeria from 66.7million liters to current levels of 44.3million liters representing a 33.58% drop in the wake of subsidy removal last year. On the other hand, smuggled fuel is a health, safety and environmental hazard to these countries where black market sales wax stronger than sales via licensed filling stations. This will grow Nigeria's scope of influence in the region.

Signal 2:  Imports will continue simply because the transitional period from import dependency to local refining self-sufficiency will take time. Politics will have a serious hand here because previous investments by old energy players into the import dependency value chain will not be easily unbundled or re-purposed. That said,  the recent presidential directive for crude to be sold in Naira to local refineries is a good signal if followed through and the call for civil society to review the transparency of these transactions is equally a good one if all parties remain honest, diligent and committed. But overall, the length of this transition is largely dependent on the federal government's political will and true interest(s).

Our take: The federal government must prioritize the stability of the local economy with more urgency and energy security is more than critical in achieving this. The witnessed lack of urgency and prioritization translates to further inflation and eroding of public trust which will only lead to more unrest and indifference of the citizenry.

Signal 3: Dangote's Fitch downgrade due to liquidity issues and impending loan obligations leaves little or no room for generosity at least in the short to medium term.

Our take: It's business and nothing personal. This is exactly where NMDPRA and NNPCL must help create a level playing field to ensure a sustained competitive environment. It's a no-brainer that other competitors in the refining space remain the only hope of sustained PMS price reduction over time. I foresee the competitive strategy for modular refining players to focus on servicing regions where logistics costs and landing costs for Dangote's PMS might not allow pricing competitiveness. NNPCL and NMDPRA must step down their currently upheld rhetoric of importation of energy products as a viable approach to ensuring Nigeria's energy security. It's even unhealthy that concerns about the quality of some locally refined products at this very early transitional stage is an issue of public discourse. Such if true ought to be treated at the back end to ensure the wrong signals are not sent to prospective players in the refining space and investors at large.

Signal 4: There is no going back on Compressed Natural Gas, CNG

Our take: I wrote 2 pieces on the CNG subject and how good the prospects are but this CNG value chain mustn't be politically hijacked. The easily foreseeable future is one where CNG will always remain an alternative energy source and it's unlikely that it will ever get to the point where our public transportation is wholly powered by CNG even in a decade from now. With this in mind government should equally have a measured expectation of the true impact of more CNG buses and infrastructure on the economy especially in the short to medium term.

So what's the way forward? The unfortunate Nigerian way of taking matters into your hands.

1) Prioritize vehicle maintenance to curb high fuel consumption.

2) Check the fuel you buy as quality varies as supply is erratic. As observed as an ordinary user, fuel quality varies for even different filling station branches of the same brand (petroleum marketer) and in some cases, a few bad supply batches are common for even stations with known good quality. So in summary be observant of how quickly fuel burns while driving and be flexible in your choices of filling stations.

3) Re-evaluate your mobility strategy to accommodate pooling, use of public transportation, change of vehicle and not having to move at all (embracing the remote culture where possible) by leveraging technology.

In conclusion and logically speaking, Nigeria has no business with high domestic energy prices and it will take deliberate leadership to unbundle the current fiasco.

https://stationfox.substack.com/p/will-petrol-pump-price-ever-crash

Insightful piece

Immune1:
↪So what's the way forward? The unfortunate Nigerian way of taking matters into your hands.
1) Prioritize vehicle maintenance to curb high fuel consumption.
2) Check the fuel you buy as quality varies as supply is erratic. As observed as an ordinary user, fuel quality varies for even different filling station branches of the same brand (petroleum marketer) and in some cases, a few bad supply batches are common for even stations with known good quality. So in summary be observant of how quickly fuel burns while driving and be flexible in your choices of filling stations.
3) Re-evaluate your mobility strategy to accommodate pooling, use of public transportation, change of vehicle and not having to move at all (embracing the remote culture where possible) by leveraging technology.
In conclusion and logically speaking, Nigeria has no business with high domestic energy prices and it will take deliberate leadership to unbundle the current fiasco.

In otherwords, Nigerians are to, yet again, source for solutions on their own to yet another problem that your government refuses to solve for the people. Kai!

Kobojunkieee:
In otherwise, Nigerians are to, yet again, source for solutions on their own to yet another problem that your government refuses to solve for the people. Kai!

The sad reality, the signals are very glaring and we must brace up.

Immune1:
↪The sad reality, the signals are very glaring and we must brace up.

Sad reality or a choice? There is a difference you know?

Kobojunkieee:
Sad reality or a choice? There is a difference you know?

In the coming months and with more refineries coming on stream, petrol should become more affordable. For the time being and in line with the glaring signals it's wisdom to plan and protect your pocket.

Immune1:
↪In the coming months and with more refineries coming on stream, petrol should become more affordable. For the time being and in line with the glaring signals it's wisdom to plan and protect your pocket.

I see now that your job is to lie for a living so I will waka pass at this point!

Kobojunkieee:
I see now that your job is to lie for a living so I will waka pass at this point!

I believe Signal 3 raised the issue of competition being the surest route to price drop which buttresses my earlier position which for reasons best known to you, you call a lie.

Dont even bother cos in my country Nigeria, whatever goes up never comes down!

Immune1:
↪I believe Signal 3 raised the issue of competition being the surest route to price drop which buttresses my earlier position which for reasons best known to you, you call a lie.

Nonsense!

valentineuwakwe:
Dont even bother cos in my country Nigeria, whatever goes up never comes down!

On this issue I guess time will tell because PMS is a very political commodity which isn't necessarily subject to market forces in Nigeria. A different politician on board or an adoption of another strategy by this government can lead to price drop overnight.