Crude oil refiners have suggested that, with appropriate interventions by the Federal Government, the pump price of petrol from Dangote Petroleum Refinery could fall below N600 per litre.
Speaking in an interview with Sunday PUNCH, Eche Idoko, Publicity Secretary of the Crude Oil Refiners Association of Nigeria (CORAN), reaffirmed the association’s belief that local refineries, such as Dangote’s, can reduce the cost of petrol.
Idoko explained that the N898/litre price cited by the Nigerian National Petroleum Company Limited (NNPC) reflected the rising exchange rate. However, he noted that the price could drop to N550 if the exchange rate is set at N1,000/$ for locally produced petroleum products.
He elaborated, “If you remember, we did say that if we begin to refine locally and there is a naira sale, the price of PMS will drop. We still stand strongly by that position.”
Idoko also emphasised that even at N898, the NNPC is purchasing petrol at N300 below the typical landing cost of almost N1,200/litre. “NNPC was buying the product at N300 less; they’re paying N300 more for the product they were importing than what they are buying from Dangote at N889,” he said.
He further explained that selling crude oil to local refineries in naira would free up about 40% of the nation’s foreign exchange currently used for petroleum imports. “If the financial sector is sincere, we should see an immediate climb by the naira against the dollar,” he added.
To further reduce the price of petrol, Idoko advised the government to sell crude to local refineries in naira at a discounted rate and peg the exchange rate at around N1,000/$.
“We have said to the government – two things you will do. You will sell in naira at a discount, and then at that discount, you will peg the price at a particular exchange rate to the dollar,” he suggested.
Idoko also addressed concerns about a potential Dangote monopoly, emphasizing that CORAN, alongside regulatory bodies like the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), would prevent such an outcome.
On the imposition of levies and taxes by NMDPRA, he noted that “about 25-30 per cent of that money goes to the government in levies,” calling for reconsideration in light of current economic challenges faced by Nigerians.
He also analysed the pricing of Dangote’s petrol, stating that a litre of PMS is priced at $0.52, which equals N842.61 at an exchange rate of N1,637/$1. If pegged at N1,000/$1, the price would be N520, and without levies and taxes, it could fall below N600.
Meanwhile, the NNPC recently announced petrol prices from Dangote refinery could reach N1,019/litre in Borno State and N950 in Lagos and surrounding areas.
This came after a disagreement between Dangote Group and the NNPC over the N898/litre price announced by the NNPC. Dangote’s Group Chief Branding and Communications Officer, Anthony Chiejina, called the NNPC’s claim misleading, urging Nigerians to await an official price announcement from the Technical Sub-Committee on Naira-based crude sales.
“We urge Nigerians to disregard this malicious statement and await a formal announcement on the pricing,” Chiejina stated, adding that Dangote refinery sold PMS to the NNPC in dollars with substantial savings.