The price of Premium Motor Spirit (PMS), commonly known as petrol, is expected to decrease to about N300 per liter once the Dangote Petroleum Refinery and other local producers begin large-scale production.
This prediction comes from operators of modular refineries, who emphasize that the government must ensure sufficient crude oil supply to local refiners to achieve this price drop, noting that foreign refineries are profiting at Nigeria’s expense.
Under the Crude Oil Refinery Owners Association of Nigeria (CORAN), a registered association of modular and conventional refinery companies, it was explained that the reduction in diesel prices following Dangote’s production would similarly affect petrol prices once it is produced in significant quantities domestically.
CORAN’s Publicity Secretary, Eche Idoko, highlighted that numerous companies currently benefit from the importation of petroleum products at Nigerians’ expense. He asserted that with adequate crude oil supply, the pump price of PMS could be reduced to N300 per liter.
Idoko questioned why Nigerians should pay nearly N700 per liter when local refinery operations could significantly lower the price, suggesting that foreign refiners are being favored at Nigeria’s cost.
Addressing concerns that crude oil is priced in dollars, Idoko maintained that massive local production of petrol would lead to a price decrease, pointing out that the price of diesel dropped from N1,700-N1,800 per liter to N1,200 per liter once Dangote started production.
He anticipates a further decrease in diesel prices by December, which is currently hindered by the exchange rate as Dangote imports crude. If local refiners could purchase crude in naira equivalent, the exchange rate’s impact would be mitigated.
On May 18, 2024, The PUNCH reported that Aliko Dangote, Africa’s richest man, stated that Nigeria would cease importing petrol by June 2024 due to Dangote refinery’s plans. Dangote claimed the refinery could meet the petrol and diesel needs of West Africa and the continent’s aviation fuel demand.
Dangote previously reduced the diesel price to N1,200 per liter from N1,700-N1,800 per liter and even below N1,000 per liter temporarily, though exchange rate issues forced a return to N1,200 per liter.
CORAN’s spokesperson argued for crude oil to be sold to local refiners at the naira equivalent of the dollar rate to strengthen the naira and reduce the prices of locally produced petroleum products.
Currently, Nigeria has 25 licensed modular refineries, with five operational and producing diesel, kerosene, black oil, and naphtha. Ten are under various stages of completion, and the remaining have received licenses to establish but face challenges due to crude oil unavailability, which hampers financing for construction. Financiers demand guarantees of crude oil supply before disbursing funds.
Oil marketers believe petrol prices should drop with local production. They welcome Dangote’s statement about the refinery starting petrol production in June and expect prices lower than the Nigerian National Petroleum Company Limited’s (NNPC) current rate.
Abubakar Maigandi, National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed optimism for prices around N500 per liter, below the NNPC’s N565.50 per liter rate.
Maigandi confirmed ongoing discussions with Dangote refinery managers about registration for purchasing petrol and diesel, though specific petrol pricing has yet to be finalized. He stressed the importance of crude oil availability for local refiners to positively impact petroleum product prices.
George Ene-Ita, spokesperson for the Nigerian Midstream and Downstream Petroleum Regulatory Authority, assured that the government has guidelines for providing crude oil to indigenous refiners, with more details forthcoming.
Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, confirmed that the government would ensure domestic crude oil supply in compliance with the Petroleum Industry Act 2021, fostering consistent supply to domestic refineries through a developed template.
