How Dangote, Other Local Refineries Could Slash Petrol Price To ₦300 Per Litre – CORAN
The price of Premium Motor Spirit (PMS), commonly known as petrol, could potentially drop to about ₦300 per litre once massive production begins at the Dangote Petroleum Refinery and other indigenous producers. This forecast comes from operators of modular refineries, who assert that with adequate crude oil supply to local refiners, Nigeria could see a significant reduction in petrol prices.
Eche Idoko, Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria (CORAN), told Punch Newspaper on Sunday, June 9, 2024, that the exorbitant costs currently paid for petrol are largely due to the dependence on imported refined products. He stressed that local production would mirror the price adjustments observed in the diesel market following Dangote’s entry into production.
“A lot of companies today benefit from the importation of petroleum products at the expense of Nigerians,” said Idoko. “If we begin to produce PMS today in large volumes, provided there is adequate crude oil supply, I can assure you that we should be able to buy PMS at ₦300/litre as the pump price.”
The call for adequate crude oil supply to local refineries is crucial, Idoko emphasised, pointing out that refineries abroad are profiting excessively from Nigeria.
“Why make Nigerians buy it at almost ₦700/litre when you know that if you allow refineries to work, the price will come down? Is it because you want to satisfy the global refiners abroad that are making so much from us?” he questioned.
Despite having abundant petroleum reserves, Nigeria’s crude oil production has tanked in recent times, prompting refineries, including Dangote’s mega refinery, to import crude.
On May 21, Neusroom reported that Dangote Refinery, the world’s largest single-train refinery, submitted a tender to buy 2 million barrels of WTI Midland crude oil for 12 months from the US. The supply, expected to start in July, will see Aliko Dangote, Africa’s richest man, import 24 million barrels for his refinery on the outskirts of Lagos, Nigeria’s economic hub.
While some have argued that a price drop might be unfeasible due to the dollar-based pricing of crude oil, Idoko cited the example of diesel prices, which fell from ₦1,700 to ₦1,200 per litre following Dangote’s production.
Idoko also noted that asking local refineries to pay for crude in naira will strengthen the currency, which has lost significant value since President Bola Tinubu’s exchange rate reform.
“We have told them (government) that even the dollars that you are asking us to use and buy this product, it is detrimental to the country. Strengthen the naira. We will buy at the international market rate, but at a naira equivalent,” Idoko stated.
Similarly, Punch also reported that oil marketers are equally optimistic about a potential reduction in petrol prices once local production commences. Abubakar Maigandi, National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed hope that Dangote’s refinery would start producing petrol soon, potentially lowering costs.
“We expect a reduced price for locally produced PMS,” he said.
Maigandi highlighted the ongoing registration process for marketers to purchase petrol and diesel from Dangote’s refinery and anticipated a petrol price of about ₦500/litre.
“We are looking at having it (PMS) at any price below the NNPC rate. The price which NNPC sells petrol is ₦565.50/litre, so we are expecting something below that price, maybe around ₦500/litre,” he stated.
Recall that Dangote revealed that his $20 billion oil refinery, regarded as a game-changer in Nigeria’s oil sector, is targeting increased production to 500,000 barrels as it aims to begin selling petrol to Nigerians by June.
“As you know, we are ramping up, and I think by July or thereabouts, we will be talking about over 500,000 barrels per day refining capacity, which is huge. And then, by sometime towards the end of the year, we believe that we will hit our capacity of 650,000 barrels per day. So, it is a very huge capacity,” Dangote said.
