A group of oil marketers has explained why the petrol price cannot drop to as low as N300 per litre, denying reports that local refining of crude oil could reduce the pump price of petrol to as low as N300 per litre.
The Major Energy Marketers Association of Nigeria (MEMAN) responded to a report that claimed the pump price of Premium Motor Spirit (PMS) would drop to around N300 per litre once the Dangote Petroleum Refinery and other indigenous modular refineries began large-scale production.
The marketers emphasized that this reduction could only happen if the government ensured a steady supply of crude oil to local refineries, highlighting that foreign refineries were taking advantage of Nigeria.
Eche Idoko, the Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria (CORAN), stated, “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 N300 per litre. Why make Nigerians pay almost N700 per litre when allowing local refineries to operate would reduce the price? Is it to satisfy global refiners profiting from us?”
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Conversely, Tunji Oyebanji, a former MEMAN chairman and current CEO of 11 Plc, told Channels Television on Monday that petrol prices could not drop to N300 per litre.
He explained, “One barrel of crude oil contains 159 litres and costs about $80. Multiplying this by N1,400 gives you N112,000 per barrel, which, when divided by 159, results in N702 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. He argued 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 N1,700 to N1,800 per litre, but as soon as Dangote refinery started production, the price dropped to N1,200 per litre.
This indicates that prices can indeed drop. Currently, diesel prices could fall further, but the exchange rate keeps them above N1,000 per litre. If the exchange rate stabilizes, diesel prices could drop below N1,000 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 following the Dangote refinery’s plans, Nigeria would no longer need to import petrol starting June this year.
Speaking at the Africa CEO Forum Annual Summit in Kigali, Dangote expressed optimism about transforming Africa’s energy landscape, stating his refinery could meet West Africa’s petrol and diesel needs and 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 N1,200 per litre from N1,700 to N1,800 per litre, although he later had to raise the price back to N1,200 per litre due to exchange rate fluctuations.