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.
