Dangote Petroleum Refinery's adoption of the European gasoline benchmark, commonly known as EBOB, has introduced a new reference for pricing petrol in Nigeria's downstream market, with marketers using the international price to determine the refinery's gantry rates.
The shift towards EBOB-based pricing represents a departure from the Premium Unleaded benchmark previously used in much of Nigeria's petrol import trade, where pricing references could be influenced by limited market transactions and substantial price fluctuations.
EBOB, published by Argus Media, has served as a major European gasoline benchmark since 2002. Its growing use in West Africa has provided a common international reference for pricing refined petrol and managing exposure to market movements.
Under the arrangement, Dangote's petrol pricing is linked to the prevailing EBOB benchmark, with an agreed commercial premium added to determine the product's value before conversion into naira.
But how exactly do marketers arrive at the gantry price?
THE CALCULATION INVOLVES FOUR MAJOR STEPS.
1. OBTAIN THE EBOB BENCHMARK
The first step is to obtain the prevailing EBOB price published by Argus Media.
For illustration, assume the benchmark stands at $800 per metric tonne, while the petrol density is 0.745 kilogrammes per litre.
2. CONVERT METRIC TONNES TO LITRES
EBOB is quoted in dollars per metric tonne ($/MT), while the gantry price is calculated in naira per litre.
Marketers must therefore establish how many litres are contained in one metric tonne of petrol.
Using the assumed density, they divide 1,000 kilogrammes by 0.745 kilogrammes per litre.
This gives approximately 1,342.28 litres per metric tonne.
3. CALCULATE THE EBOB PRICE PER LITRE
With the volume established, the next step is to divide the $800 benchmark by 1,342.28 litres.
This produces an EBOB value of approximately $0.596 per litre.
4. ADD AGREED PREMIUM AND CONVERT TO NAIRA
Assume Dangote's agreed premium is $0.080 per litre. Marketers add this to the EBOB price of $0.596 per litre, bringing the total to $0.676 per litre.
At an exchange rate of ₦1,500 to the dollar, multiplying $0.676 by ₦1,500 gives an estimated gantry price of ₦1,014 per litre.
The resulting figure represents the EBOB benchmark plus Dangote's assumed premium, converted into naira. It is an illustrative calculation and does not necessarily represent an actual prevailing gantry price.
