In Nigeria’s fuel market, two terms often dominate public discussions whenever petrol prices shift: ex-depot price and pump price.
While both influence what motorists ultimately pay, they represent different stages in the fuel supply chain, and understanding the distinction is key to making sense of changes at the filling station.
Okay.ng reports that recent adjustments by refineries and major importers, such as the latest ex-depot price cut announced by the Dangote Refinery, have sparked questions among Nigerians on why retail pump prices do not drop instantly.
Industry experts explain that the link between these two prices is shaped by logistics, taxes, market forces, and the operational realities of fuel distribution.
What is the Ex-Depot Price?
The ex-depot price is the cost at which petrol is sold to marketers from depots or refineries before it is transported to filling stations. This figure is set by producers or importers and covers the wholesale cost of the product. It does not include transportation costs, retail margins, or other expenses associated with delivering the fuel to motorists.
What is the Pump Price?
The pump price is what consumers pay per litre at filling stations. This figure reflects not only the ex-depot price but also transportation costs, operational expenses, profit margins for marketers, and in some cases, regional pricing variations due to distance from supply points.
Why Pump Prices Don’t Change Immediately After Ex-Depot Adjustments
Even when an ex-depot price drops, the impact on the pump price can take time to materialise. This is because filling stations often sell existing stock purchased at the previous rate before restocking at the new price. Marketers also factor in logistics costs such as fuel truck rentals, driver fees, and security expenses during transit.
Other Factors That Influence Pump Price
- Transportation Costs – Moving fuel from depots to stations, especially in remote areas, can significantly add to the final price.
- Operational Expenses – Salaries, maintenance, power generation, and other business costs are built into the pump price.
- Market Dynamics – In a deregulated market, competition between stations can drive prices slightly up or down.
- Government Policies and Taxes – Levies or regulatory fees may also influence final pricing.
The Role of Dangote Refinery and Local Supply
With the commencement of large-scale domestic refining, especially by the Dangote Refinery, industry stakeholders expect a more stable and predictable ex-depot pricing structure. Local production reduces dependence on imported fuel, potentially lowering costs related to shipping and foreign exchange fluctuations. However, experts caution that these savings still depend on efficient distribution networks to be fully passed on to consumers.
How Consumers Can Monitor Price Changes
Nigerians are encouraged to monitor official announcements from reputable marketers, industry regulators, and refineries to stay informed. Visiting multiple stations and comparing prices can also help identify competitive deals, especially in urban centres where multiple suppliers operate.
