A group of oil marketers has explained why petrol prices can’t drop to as low as N300 per litre, refuting claims that local crude oil refining would bring the pump price of petrol down to that level.
The Major Energy Marketers Association of Nigeria addressed a report suggesting that the price of Premium Motor Spirit would fall to around ₦300 per litre once large-scale production began at the Dangote Petroleum Refinery and other local modular refineries.
According to the marketers, this price reduction is contingent upon the government ensuring a consistent supply of crude oil to local refineries.
They pointed out that foreign refineries are currently exploiting Nigeria’s situation.
The Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria, Eche Idoko, noted, “Many companies today benefit from the importation of petroleum products at the expense of Nigerians.”
Idoko added, “If we start producing PMS in large volumes with adequate crude oil supply, I can assure you that the pump price could drop to ₦300 per litre. Why make Nigerians pay almost ₦700 per litre when allowing local refineries to operate would reduce the price? Is it to satisfy global refiners profiting from us?”
On the other hand, a former MEMAN chairman and current CEO of 11 Plc, Tunji Oyebanji, stated on Monday during an interview with Channels Television that petrol prices could not drop to ₦300 per litre.
He explained, “One barrel of crude oil contains 159 litres and costs about $80. Multiplying this by ₦1,400 gives you ₦112,000 per barrel, which, when divided by 159, results in ₦702 per litre of crude alone, excluding refining, transportation, finance costs, and distribution margins.”
Oyebanji’s view contradicts CORAN’s assertion that petrol prices would drop significantly, maintaining that since crude oil, the raw material for PMS, is priced in dollars, a substantial price reduction is unlikely.
He noted, “We were selling diesel for ₦1,700 to ₦1,800 per litre, but as soon as Dangote refinery started production, the price dropped to ₦1,200 per litre.
“This indicates that prices can indeed drop. Currently, diesel prices could fall further, but the exchange rate keeps them above ₦1,000 per litre. If the exchange rate stabilizes, diesel prices could drop below ₦1,000 per litre.
“Even though Dangote buys crude in dollars within Nigeria, he could mitigate some exchange rate impacts by not importing.”
On May 18, 2024, Africa’s richest man, Aliko Dangote, announced that with the Dangote refinery’s plans, Nigeria would no longer need to import petrol starting June this year.
While speaking at the Africa CEO Forum Annual Summit in Kigali, Dangote was confident about transforming Africa’s energy landscape.
He stated that his refinery could meet West Africa’s petrol and diesel needs as well as the continent’s aviation fuel demand.
He declared, “By June, Nigeria should not need to import any gasoline; not even a single drop.” Earlier this year, Dangote had reduced the pump price of diesel to ₦1,200 per litre from ₦1,700 to ₦1,800 per litre, although he later had to raise the price back to ₦1,200 per litre due to exchange rate fluctuations.
