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Nigeria: Marketers worry about expensive petrol ahead of supply from Dangote Refinery

Published

4 months ago

July 3, 2024

There are concerns by petroleum marketers in Nigeria that the price of Premium Motor Spirit, also known as petrol, may rise higher than expected as petrol from privately-run Dangote Petrochemical Refinery hits the local market in two to three weeks.

The 650,000-capacity refinery’s unsuccessful attempt to obtain feedstock locally from foreign oil firms was the background against which the marketers talked. The marketers, in Interview, expressed concern that the cost of importing crude oil would affect production costs, perhaps leading to an increase in the Dangote PMS’s ex-depot price.

At a greater cost, Dangote Refinery has persisted in importing crude oil from the US and other nations. Some local marketers claim that this development has made their diesel and aviation fuel less appealing to them because of cost.

Nigeria’s state-owned refineries have not operated at full capacity for many years, despite numerous attempts to bring them back online. The high level of national anticipation surrounding the Dangote refinery is partly attributed to the failures of both the previous and present governments. The country has been hopeful that the Dangote refinery will cut down the price of PMS which jumped from around N200/litre to over N600/litre after the removal of fuel subsidies by President Bola Tinubu on May 29, 2023.

Stakeholders worry that Nigerians’ hopes of obtaining less expensive PMS may be dashed due to Dangote’s lack of access to local crude oil. The Independent Petroleum Marketers Association of Nigeria’s National Vice President, Hammed Fashola, stated that the organization feared crude imports would cause Dangote gasoline prices to spike.

Even while Fashola agreed that the IOCs also have other commercial obligations, he said that the rejection of the IOCs to supply crude oil to Dangote would be a significant issue for the $20 billion refinery.

“The non-supply of crude is a big challenge for Dangote. You know Dangote cried out too. The international oil companies too will have their reasons; you know they have their commitments too. It’s not like they will start feeding Dangote only. People should understand that. I think Dangote should consider that. I know this prompted Dangote to go outside the soil of Nigeria to seek crude oil. You know when he keeps bringing crude oil from the United States, that is another cost. That is another problem we are scared of because it will still boil down to the high cost of petrol, unlike where he can source the crude locally in Nigeria,” Fashola said.

“I will advise that the government should assist Dangote in the supply of crude oil. If Dangote can get an adequate supply of crude oil locally, I think the whole problem will be solved somehow. I don’t think there will be any need for anybody to go and bring in petrol again, especially if Dangote is selling at a reasonable price,” he added.

However, Fashola ordered Dangote to refrain from monopolizing the petroleum industry if he eventually gained government approval, stating that the refinery had to charge a fair price for PMS.

“Dangote too should not see it as an advantage to start monopolising the market by raising fuel prices. Dangote has to come with a clean mind by selling at a reasonable price to the public, otherwise, people will still go and start importing if Dangote’s price is high. But if the price is normal and anybody who brings in product from abroad knows that he would run at a loss, nobody will venture into it. Dangote should be sincere, and the government should support him,” he stated.

Related Topics:DANGOTE REFINERY Featured Nigeria

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Finance minister says reduced oil prices pressuring Angola

Published

1 hour ago

October 26, 2024

Ifeoluwa Dada

Angola’s finance minister has told journalists that falling oil prices put “lots of pressure” on the nation, predicting that prices would average between $70 and $72 per barrel in 2024 as opposed to $75.

In an interview conducted on the fringes of the IMF and World Bank annual meetings in Washington, Finance Minister Vera Daves de Sousa stated that the government of the continent’s second-largest crude oil exporter will likewise keep phasing down fuel subsidies.

“How many steps we didn’t decide yet, but our idea is to do it in steps,” she said, confirming that subsidies were amounting to around 4% of GDP this year.

At the start of this year, Angola departed from the Organisation of the Petroleum Exporting Countries.

On Friday, Brent crude futures rose 2.25% to $76.05 a barrel. Analysts have cautioned that next year’s high supply and weak demand will put pressure on oil prices.

According to Daves de Sousa, the administration will submit its budget to Parliament the following week, and during the next few days, the numbers regarding the amount of outside funding that will be required will be finalised.

Angola is considering internally whether to apply for a loan program from the International Monetary Fund, she said.

“We asked for a note with options of programs in case we request, and considering our current situation, what they understand as a good program for us,” she said.

According to her, the administration was also looking at other options, such as combining funds from domestic banks and capital markets with support from other multilateral sources like the World Bank and the African Development Bank.

Angola’s most recent IMF program, worth $3.7 billion, was approved in December 2018 after the country’s earnings were severely damaged by the collapse of global petroleum prices.

Angola’s finance minister has told journalists that falling oil prices puts “lots of pressure” on the nation, predicting that prices would average between $70 and $72 per barrel in 2024 as opposed to $75.

“How many steps we didn’t decide yet, but our idea is to do it in steps,” she said, confirming that subsidies were amounting to around 4% of GDP this year.

At the start of this year, Angola departed from the Organisation of the Petroleum Exporting Countries.

On Friday, Brent crude futures rose 2.25% to $76.05 a barrel. Analysts have cautioned that next year’s high supply and weak demand will put pressure on oil prices.

Angola is considering internally whether to apply for a loan program from the International Monetary Fund, she said.

“We asked for a note with options of programs in case we request, and considering our current situation, what they understand as a good program for us,” she said.

Angola’s most recent IMF program, worth $3.7 billion, was approved in December 2018 after the country’s earnings were severely damaged by the collapse of global petroleum prices.

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IMF recommends exporting African countries make crucial changes. Here’s why

Published

1 hour ago

October 26, 2024

Ifeoluwa Dada

Abebe Aemro Selassie, director of the International Monetary Fund (IMF) Africa, has stated that countries in Sub-Saharan Africa that rely on commodity exports must change their economies to address uneven regional economic growth.

According to the IMF’s most recent World Economic Outlook, which was released this week, the region is predicted to develop by 3.6% this year, which is unchanged from last year and lower than an April prediction of 3.8%. Commodity economies are likely to lag behind their more diverse rivals.

According to the IMF’s assessment, the growth of the commodity-intensive nations is around half that of the rest of the region, with oil exporters bearing the brunt of what it called “subdued and uneven” regional growth.

“South Sudan, Nigeria, Angola are all very much in that camp,” Abebe told Reuters.

The IMF’s regional economic outlook for Sub-Saharan Africa was released on Friday, and while diverse economies like Senegal and Tanzania are predicted to develop at a rate higher than the regional average, Nigeria would only grow at a rate of 2.9%.

“They have had very large macroeconomic imbalances, financing challenges which have held back growth,” Abebe said.

He claimed that because those issues had led to rising inflation and pressure on the expense of living, the Nigerian government needed to “squarely address” them.

The administration of President Bola Tinubu has started a number of measures that it claims are intended to boost economic expansion and draw in foreign investment. The IMF predicted that South Africa, whose growth has been hampered by debilitating power outages, would expand by 1.1% this year.

The IMF stated that armed conflicts are also impeding growth, pointing to the fact that South Sudan’s oil exports are impeded by fighting in neighbouring Sudan, where the crude export pipeline is located.

“They (oil exporters) need to find new sources of growth, get more private sector investment – so working on reforms that will facilitate that is important,” Abebe said.

According to the IMF research, Sub-Saharan Africa’s economic growth is anticipated to improve marginally to 4.2% in the upcoming year.

Although Sub-Saharan Africa accounted for almost half of the world’s 20 fastest-growing economies this year, the research issued a warning that greater growth rates were necessary to combat pervasive poverty and inequality.

According to the IMF, as nations grapple with high debt loads and high debt servicing costs, one of the primary barriers to higher growth is a lack of access to inexpensive financing.

The fresh money was expensive, even though some nations were able to sell bonds on global capital markets this year after a two-year break brought on by geopolitical shocks and high interest rates in developed nations like the US.

“The old development finance architecture is not delivering, and, if anything, kind of is in the process of disintegrating,” Abebe said, citing “very problematic levels” of official bilateral funding for poor countries.