Oil & GasJanuary 15, 20252 min read
Understanding the Pump Price: Breakdown of Petrol Costs
Energy Economics Team
Power.ng Editorial Team
Where does your ₦1,000 go? Breakdown of landing cost, distribution margins, retailers margin, and NMDPRA levies.
Power.ng quick answer
For understanding the pump price: breakdown of petrol costs, Power.ng's current answer is: Detailed breakdown of the petrol pump price in Nigeria. How much is landing cost, distribution, and marketer margins?
Ever wondered why fuel costs what it costs? Here is the anatomy of a litre of PMS in a deregulated market.
The Cost Components
- Direct Crude Cost/Landing Cost (~80%): The cost of the raw product (crude oil) + refining cost. This is tied to Brent Crude prices ($/barrel) and the Naira exchange rate.
- Distribution Margins (~15%):
- Bridging Fund (NMDPRA): Money pooled to equalize prices across the country (so Sokoto pays similar to Lagos).
- Transporters Margin (NARTO): Cost of trucking the fuel from depot to station.
- Retailer Margin (~5%): The profit for the filling station owner to run generators, pay staff, and maintain pumps.
Why Prices Differ
Prices are cheapest in Lagos (closest to Dangote/Import terminals) and get progressively more expensive as you move North due to transport costs.
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