Recent data from the Major Energies Marketers Association of Nigeria (MEMAN) shows that the landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has decreased to N981 per litre, marking a significant drop from around N1,130 in previous weeks.

This reduction of over N140, as of September 25, 2024, is attributed to falling global crude oil prices.

The cost of refined petroleum products, including petrol, diesel, and aviation fuel, is heavily influenced by crude oil prices and foreign exchange rates.

Brent crude, the global benchmark, traded at an average of over $80 per barrel in August 2024 but has since fluctuated between $70 and $75 per barrel. By Thursday, Brent was priced at $71.41 per barrel, down from $73.46 the previous day, according to data from the petroleum ministry.

This drop in crude prices is partly due to decreased oil demand in China and increased production announcements by the Organisation of Petroleum Exporting Countries (OPEC). Statistica, a global statistics firm, reported an average Brent crude price of $80.36 per barrel in August 2024, reflecting a downward trend.

As petrol landing costs decrease, major oil marketers in Nigeria have resumed importing the product. Previously, the Nigerian National Petroleum Company Limited (NNPC) was the sole importer.

However, with the full deregulation of the downstream oil sector and rising pump prices, the Dangote Petroleum Refinery has also started producing and releasing locally refined petrol.

Reports indicate that major oil marketers received shipments of approximately 141 million litres of imported PMS in mid-September, marking a shift in supply dynamics.

Despite the drop in landing costs, petrol prices at the ex-depot level vary widely across Nigeria. In Lagos, prices range from N865 to N1,200 per litre, while in Calabar and Port Harcourt, they range from N980 to N1,400. The landing cost for diesel is N1,089 per litre, with an ex-depot price of N1,165 in Lagos and N1,200 in Calabar and Port Harcourt. Aviation fuel now stands at N1,117.34 per litre.

A notable price difference has emerged between imported petrol and fuel from the Dangote Refinery. According to the NNPC, Dangote-sourced fuel is priced at N898 per litre, but Dangote officials have denied selling their fuel at this rate, leaving some ambiguity around the actual price.

When Dangote launched its locally produced fuel, NNPC raised petrol prices from around N600 to between N855 and N900 per litre.

The NNPC later indicated that Dangote-sourced fuel could exceed N1,000 per litre in northern regions, with prices reaching N1,019 in states like Borno, and N999.22 in Abuja, Sokoto, and Kano. In southern states, like Oyo and Rivers, prices hover around N960 per litre, with Lagos recording the lowest prices at N950.

While petrol prices have risen to over N1,200 in some areas, certain major marketers in Lagos are still selling at N910 per litre.

According to Dapo Segun, the Executive Vice President, Downstream at NNPC, the pricing of Dangote-refined fuel is market-driven, despite reaching an agreement with Dangote management.

“Dangote said to us, ‘This is how much I want for it (PMS)’. And we say, ‘Hey, Dangote, if we go out there, we can get it for this much, so we won’t pay you this much for it.’ We went into negotiation, which took over a week to finalize. They (Dangote officials) will come with their position, we’ll come with a counter; they’ll revise, and we’ll counter again,” Segun said, emphasizing a point made by Soneye that the NNPC would lift Dangote PMS only if it was cheaper than imports.

As sales of PMS to the NNPC continue at the Dangote refinery, there is hope among Nigerians that prices will decrease further when the naira crude sale commences on October 1, 2024.

Months after the exit of multinational giants like Kimberly-Clark, Procter & Gamble (P&G), Unilever, and GlaxoSmithKline from Nigeria, PZ Cussons has revealed its plans to sell its Nigerian subsidiaries.

The British-based consumer goods company is looking to mitigate its exposure to the volatile Nigerian economy, particularly the dramatic 70% devaluation of the naira.

In its preliminary financial results for the year ended May 31, 2024, published on its website, PZ Cussons disclosed that it is considering both partial and full sales of its Nigerian operations.

The company noted that it had received multiple expressions of interest regarding the potential sale of its African business, which includes Nigeria.

The company highlighted the challenging economic environment in Nigeria, citing rising inflation and currency depreciation as significant factors behind its decision.

The 70% devaluation of the naira has severely impacted PZ Cussons’ financial performance, especially with the company incurring foreign exchange losses of £107.5 million, resulting from the settlement of U.S. dollar-denominated liabilities in its Nigerian subsidiaries.

Despite the challenges in Nigeria, PZ Cussons reported positive growth in other markets, particularly in the UK Personal Care segment, which saw double-digit revenue growth during the same period.

The company’s decision to explore the sale of its Nigerian assets comes amid a period of operational transformation aimed at focusing on more competitive markets.

“We have taken the important first steps to transform our business and maximise shareholder value, by refocusing our portfolio on where we can be most competitive,” the company stated.

In addition to the devaluation of the naira, PZ Cussons has faced considerable losses within its Nigerian subsidiary.

The company reported a staggering N94.78 billion loss in the third quarter of the 2023/24 financial year, a sharp contrast to the N11.213 billion profit made in the same period in 2022. In the second quarter of the same fiscal year, the company reported another N74.14 billion loss.

The company’s Nigerian subsidiary has also been operating under a negative net asset position, with liabilities exceeding assets by N46.42 billion.

This financial strain has raised further concerns about the future of PZ Cussons in Nigeria, a market where it once held a significant presence.

In April 2024, the company’s CEO, Jonathan Myers, hinted that PZ Cussons was reviewing its brand portfolio and geographic footprint due to the complexities of doing business in Nigeria.

This statement followed the Securities and Exchange Commission’s rejection of PZ Cussons’ bid to acquire the minority shares in its Nigerian subsidiary.

As of May 31, 2024, PZ Cussons held a 73.27% stake in PZ Cussons Nigeria Plc, representing 2.90 billion shares worth N45.53 billion. The company had previously attempted to purchase the remaining 26.73% of minority shares at N21 per unit in September 2023, but the request was denied by the Nigerian Securities and Exchange Commission.

The potential sale of PZ Cussons’ Nigerian assets marks another chapter in the ongoing exodus of multinational companies from Nigeria, all of which cite economic instability, currency fluctuations, and high inflation as key reasons for scaling back their operations or leaving entirely.

The future of PZ Cussons’ operations in Nigeria remains uncertain as the company navigates these financial challenges and explores opportunities to restructure its business.

However, the company’s willingness to consider a sale signals the increasingly difficult environment for multinational corporations in Nigeria.

The Nigerian Naira continued its depreciation trend yesterday, falling to N1,650 per dollar in the parallel market, down from N1,645 per dollar on Wednesday.

Similarly, in the Nigerian Autonomous Foreign Exchange Market (NAFEM), the Naira weakened further, depreciating to N1,544.02 per dollar from N1,539.65 per dollar the previous day, indicating a decline of N4.37.

Data from FMDQ revealed a 37.2% decrease in the volume of dollars traded in the official market, with turnover dropping from $139.48 million on Wednesday to $87.51 million on Thursday.

As a result, the margin between the parallel market and NAFEM rates widened to N105.98 per dollar, up from N105.35 per dollar the day before.

This depreciation of the Naira highlights the ongoing challenges in Nigeria’s foreign exchange market, further impacting economic stability.