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Petrol Price Could Tumble to N300 Per Litre with Local Refining Boom – Modular Refiners

The cost of Premium Motor Spirit, commonly referred to as petrol, is projected to nosedive to approximately N300 per litre once the Dangote Petroleum Refinery and other indigenous producers kick into high gear, according to Sunday’s revelation from operators of modular refineries.

However, they underscored that this feat hinges on the government’s commitment to providing adequate crude oil supplies to local refiners, asserting that foreign refineries have been fleecing Nigeria.

Speaking collectively as the Crude Oil Refinery Owners Association of Nigeria (CORAN), an umbrella body for modular and conventional refinery firms in the country, they drew parallels between the anticipated impact on petrol prices and Dangote’s refinery’s effect on diesel costs.

“Multitudes of companies today profit from the importation of petroleum products at the expense of Nigerians,” lamented Eche Idoko, CORAN’s Publicity Secretary.

Idoko remarked to our correspondent, “If we commence large-scale PMS (petrol) production today, provided there is sufficient crude oil supply, I can assure you that we should be able to sell PMS at a pump price of N300 per litre.”

“Why compel Nigerians to purchase it at nearly N700 per litre when you know full well that allowing refineries to operate will drive down the price? Is it to pander to the foreign refiners abroad that are reaping enormous profits from us?”

When confronted with the argument that such a dramatic price reduction might be implausible since crude oil, the raw material for PMS, is denominated in dollars, the CORAN official remained adamant that petrol prices would plummet once indigenous refiners start mass production.

“We were selling diesel for N1,700 to N1,800 per litre, but as soon as the Dangote refinery came online, it slashed the price to N1,200 per litre. What further proof do you require?” he queried.

“As I speak to you now, there is a strong likelihood that diesel prices will decline even further before December. The sole reason diesel is not retailing below N1,000 per litre is our exchange rate.”

“If the exchange rate drops, diesel will undoubtedly fall below the N1,000 per litre threshold. The exchange rate concern stems from Dangote’s reliance on imported crude. If he weren’t importing, the exchange rate might not have such a profound impact, though he still purchases crude in dollars (in Nigeria) anyway.”

Reports indicate that Africa’s wealthiest man, Aliko Dangote, had declared that, following the Dangote refinery’s meticulously laid plans, Nigeria would no longer need to import petrol starting in June this year.

Dangote had also asserted that his refinery could satiate West Africa’s petrol and diesel demands, as well as the continent’s aviation fuel requirements. He expressed this optimism about transforming Africa’s energy landscape during the Africa CEO Forum Annual Summit in Kigali.

“At present, Nigeria has no need to import anything apart from petrol, and by sometime in June, within the next four or five weeks, Nigeria shouldn’t import even a single drop of petrol,” the billionaire had emphatically stated.

Earlier this year, Dangote had slashed the pump price of diesel to N1,200 per litre when the commodity was trading between N1,700 and N1,800 per litre at the time.

He further reduced the price to below N1,000 per litre but could not sustain this level due to the escalating exchange rate. The refinery eventually reverted the price to the initial rate of N1,200 per litre.

Speaking on Sunday, the CORAN spokesperson articulated that this was the impetus behind the modular refiners’ clamour for the sale of crude oil at the naira equivalent of the dollar rate.

“We have implored them (the government) that even the dollars they are demanding we use to procure this product are detrimental to the country. Strengthen the naira. We will purchase at the international market rate, but at a naira equivalent.”

“These are the pressing issues, and they are well aware of these realities, but we cannot fathom why they are truly unable to take decisive actions to rectify these concerns.”

“Provide crude to local refineries, permit crude purchases in naira equivalent, cultivate a business-friendly environment, and witness the crash in locally produced petroleum product prices,” Idoko asserted.

Nigeria currently boasts 25 licensed modular refineries. Five of them are operational, producing diesel, kerosene, black oil, and naphtha. Approximately 10 are at various stages of completion, while the remainder have received licenses to establish.

Operators of modular refineries had previously stated that apart from the five currently in operation, the remaining plants are embroiled in a major challenge: the unavailability of crude oil, a development that has stalled funding from financiers.

“Only about five of our members have completed their refineries. The others are grappling with a major challenge.”

“This challenge is that the entities supposed to finance them have not disbursed construction financing because they demand some level of guarantee.”

“A guarantee that if they complete the refinery, they will receive feedstock, which, of course, is crude oil,” Idoko had elucidated.

Oil marketers, too, believe that the cost of gasoline should be lower than its current price once its production commences in Nigeria.

They welcomed Dangote’s assertion that his refinery should start pumping out petrol this month and expressed hope that the cost would be less than the price at which the Nigerian National Petroleum Company Limited currently sells.

“We expect a reduced price for locally produced PMS, as I’ve earlier told you,” affirmed Abubakar Maigandi, the National President of the Independent Petroleum Marketers Association of Nigeria.

Maigandi, while speaking from Saudi Arabia, also stated that no date has been communicated to marketers on when Dangote will release petrol to the market. Officials of the Dangote refinery have remained tight-lipped on this matter.

The IPMAN president had earlier stated that marketers were in discussions with the plant’s managers, but not specifically on gasoline pricing.

“We have been discussing, but not about the price of petrol yet, but rather other matters such as the registration of members for the purchase of petrol and diesel from the refinery.”

“It is true that we have started buying diesel from them, but you have to register with the company first. So a general registration is ongoing,” he explained.

Maigandi, however, stated that though marketers had yet to receive the projected price for petrol from the plant, dealers would want to see a PMS price of about N500 per litre from the Dangote refinery.

“We are looking at having it (PMS) at any price below the NNPC rate. The price at which NNPC sells petrol is N565.50 per litre, so we are expecting something below that price, maybe around N500 per litre,” Maigandi stated.

The oil dealers also joined the chorus, calling for the provision of crude oil to local refiners and stressing that this would positively impact the prices of refined petroleum products.

“Of course, it is imperative for crude to be made available to local refineries because this will surely affect petroleum products’ prices positively,” the IPMAN president stated.

Regulators weigh in. The spokesperson of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, George Ene-Ita, expressed confidence that the government has guidelines for the provision of feedstock (crude) to indigenous refiners.

Ene-Ita promised to provide additional information on the matter, as he stated that he could not divulge further details at the time he was contacted by our correspondent.

Recall that the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, had earlier promised that the government would ensure that crude oil was supplied to domestic refiners.

He stated that in compliance with the provisions of Section 109(2) of the Petroleum Industry Act 2021, the NUPRC, in a landmark move, had developed a template guiding the activities for the Domestic Crude Oil Supply Obligation.

“The commission, in conjunction with relevant stakeholders from NNPC Upstream Investment Management Services, representatives of Crude Oil/Condensate Producers, Crude Oil Refinery Owners Association of Nigeria, and Dangote Petroleum Refinery, formulated the template for the buy-in of all.”

“This is a bid to foster a seamless implementation of the DCSO and ensure a consistent supply of crude oil to domestic refineries,” Komolafe stated.


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