Key Highlights
- Average price of diesel in June was ₦204.97.
- Average diesel price decreased by 0.34% month-on-month in June.
- Average diesel price decreased by 2.59% year-on-year in June.
- Taraba State recorded highest average diesel price of ₦255.12 in June.
- Nasarawa State recorded lowest average diesel price of ₦175.41 in June.
The Nigeria Bureau of Statistics (NBS) has released the Automotive Gas Oil (Diesel) Price Watch for the month of June 2018. The NBS report shows that average price paid by consumers for diesel decreased by 2.59% year-on-year and 0.34% month-on-month to ₦204.97 in June 2018 from ₦205.67 in May, 2018.
According to the NBS report, average diesel price across different zones in the country shows that Northeast zone recorded the highest price paid by consumers for diesel in June with ₦216.03. It was followed by the Northwest zone with ₦210.69, while Southwest was the third zone with the highest diesel price in June with ₦210.72.
Meanwhile, South South and North Central recorded the lowest diesel prices of ₦196.72 and ₦198.75 respectively during the month in view.
However, during the same month, Taraba State has the highest average price of diesel (₦255.12). The second state is Gombe with an average price of ₦228.02, while Kebbi is third with an average price of ₦227.5 for diesel in the month of June, 2018.
The report also shows that Nasarawa State has the lowest average price of Automotive Gas Oil in June 2018 (₦175.41). Adamawa closely followed with an average price of ₦180.00 and Abuja – where an average price of diesel sold for ₦186.67 in June 2018 – was third.
Meanwhile, the NBS report also shows that the 12 months average prices for diesel was ₦210.24 in June 2017, ₦199.26 in November, 2017, and ₦205.67 in May, 2018.
Implication
This little decrease in the prices of diesel could lead to a corresponding small reduction in the operating costs for medium and large scale businesses, since they rely on diesel to power their machinery and equipment. Hence, it may also positively impact on their expected profit and revenue.
Effects on Stocks
Reduction in the prices of diesel could also have a negative effect on revenues (and by extension, on stock price) of companies in the downstream oil and gas space that are involved in the distribution and marketing of refined Automotive Gas Oil. The downstream oil and gas companies that may be affected include the likes of Mobil, Total, Oando, Forte Oil, Conoil, Capital Oil, Japaul Oil and Eterna Oil.
These companies make money selling products such as diesel to corporate organisations around the country. Depending on their share of the volume of sales, their revenues and profits may also decrease.
It is also important to add that downstream players equally have to deal with slimmer margins arising from competition and supply distribution challenges.
However, for the non-oil and gas companies, particularly manufacturing firms in the Industrial and FMCG space, the decline in the cost of diesel may positively affect their bottom-lines. These firms often rely on diesel as a backup for their power supply and report this as an expense.
