Petrol Price Remains Above Fixed Upper Price Limit

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The National Bureau of Statistics (NBS) has just released its Premium Motor Spirit (PMS) or petrol price watch for the month of March 2018. According to the report, the average price paid by consumers across the country for PMS decreased by 5.3% m/m to N163.4 but increased by 9.4% on a y/y basis.

States with the lowest prices were Kaduna (N147.3), Bauchi (N145.6) and Abuja (N145.00), while the highest prices were obtainable in Taraba (N184.38), Jigawa (N180.93) and Ekiti (N173.89).

Although the current price of petrol marks a third consecutive decline since January 2018, we think a more sustainable inducement to lower prices would come from a shift to alternative energy, improved utilization rates at existing refineries, and the 650,000 b/d Dangote refinery expected to roll out completely by 2020. While these factors will reduce petroleum importation, any probable upside may be capped by the limited pipeline infrastructure for new oil production projects.

In the interim, we believe that the NNPC would continue paying any price differential between the official petrol pump price and the landing cost of the commodity to allay the fear of further petrol price increase vis-à-vis political consideration and sensitivity of the pre-election period.

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