As Nigeria gears up for significant petroleum production by the Dangote Petroleum Refinery and other local producers, operators of modular refineries have projected a potential drop in the pump price of Premium Motor Spirit (PMS), commonly known as petrol, to around N300 per litre.
These operators, represented by the Crude Oil Refinery Owners Association of Nigeria (CORAN), emphasized the necessity for the government to ensure adequate crude oil supply to local refiners. They argued that international refineries have been overcharging Nigeria.
Speaking on behalf of CORAN, a spokesperson highlighted the potential impact of massive local production on petrol prices, drawing parallels to the drop in diesel prices witnessed after Dangote’s refinery began operations.
“When we start producing PMS in large quantities, with sufficient crude oil supply, we can confidently expect the pump price to decrease to N300 per litre. There’s no reason for Nigerians to pay nearly N700 per litre when local refineries can lower the price,” the spokesperson remarked.
Responding to concerns about the influence of dollar-priced crude oil, the CORAN official remained steadfast in their assertion that petrol prices would decline significantly once local production is scaled up.
They cited the case of diesel prices, which dropped from N1,700-1,800 per litre to N1,200 per litre after Dangote’s refinery began operations, and even further with a possibility of dropping below N1,000 per litre if the exchange rate improves.
Aliko Dangote, Africa’s richest man, previously announced plans for his refinery to eliminate Nigeria’s need for petrol imports, expressing confidence in meeting West Africa’s fuel demands. His refinery has also played a role in reducing diesel prices in Nigeria.
However, modular refinery operators face challenges, primarily due to inadequate crude oil availability, hindering funding and progress on construction. They urge the government to ensure consistent crude oil supply and a favorable business environment to support local production and drive down petroleum product prices.
Oil marketers also anticipate a reduction in petrol prices with increased local production, echoing the sentiment that the cost should be lower than the current rate set by the Nigerian National Petroleum Company Limited.
While Dangote’s refinery aims to begin petrol production this month, no specific date for market release has been communicated to marketers. Nonetheless, they anticipate purchasing petrol from the refinery and hope for competitive pricing below NNPC rates.
Marketers are engaging with the refinery on registration processes but have not discussed petrol pricing yet. However, they anticipate a price below NNPC’s rate, possibly around N500 per litre.
Furthermore, stakeholders emphasize the importance of providing crude oil to local refineries, believing it will positively impact petroleum product prices. The government has assured of guidelines for domestic crude oil supply, aligning with provisions in the Petroleum Industry Act 2021 to support local refining operations.
