Key Highlights
- Average price of diesel in September was ₦211.64.
- Average diesel price increased by 1.76% month on month and 14.52% year on year in September.
- Borno State recorded the highest average diesel price of ₦245.83.
- Rivers State recorded the lowest average diesel price of ₦190.00.
The Nigeria Bureau of Statistics (NBS) has released the Automotive Gas Oil (Diesel) Price Watch for the month of September 2018. The NBS report shows that average price paid by consumers for Automotive Gas Oil popularly known as diesel increased by 14.52% year-on-year and 1.76% month-on-month to ₦211.64 in September 2018 from ₦207.98 in August 2018.
According to the NBS report, the average diesel price across different zones in the country shows that the North-East zone recorded the highest price paid by consumers for Diesel in September with ₦218.47. It was closely followed by the North-West zone with ₦216.99, while South-West was the third with the highest diesel price in September with ₦216.83. Meanwhile, South-South and North-Central zones recorded the lowest diesel prices of ₦200.56 and ₦204.67 respectively during the month under review.
Among the 36 states of the federation, Borno State has the highest average price of Diesel (₦245.83). The second state is Taraba with an average price of ₦235.00, while Sokoto is third with an average price of ₦228.33 for diesel in the month of September 2018.
The report also shows that Rivers State has the lowest average price of Diesel in September 2018 (₦190.00). Katsina closely followed with an average price of ₦195.63 and the third state is Edo where the average price of diesel sold for ₦197.28 in September 2018.
Meanwhile, the NBS report also shows that the 12 months average prices for Automotive Gas Oil (Diesel) was ₦184.80 in September 2017, ₦199.26 in November 2017 and ₦213.82 in January 2018. Other monthly average prices in the past one year include ₦205.67 in May 2018, and ₦204.32 in July 2018.
Implication
This little increase in the prices of Automotive Gas Oil (Diesel) could lead to a corresponding small rise 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 negatively impact on their expected profit and revenue.
Effects on Stocks
Increase in the prices of Automotive Gas Oil (Diesel) could also have a positive effect on the 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 (Diesel). 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 increase.
It is important to also 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 rising cost of Automotive Gas Oil (Diesel) may negatively affect their bottom-lines. These firms often rely on diesel as a backup for their power supply and report this as an expense.