15th December 2024
The Independent Petroleum Marketers Association of Nigeria, IPMAN, has urged the Dangote refinery to consider reducing its ex-depot price from N970 per litre since the estimated cost of landing petrol on Nigeria’s shores has dropped to N900.28 per litre.
IPMAN, also a sought a reduction in the price of petrol across the country
During a Federal Executive Council, FEC, meeting in July 29, President Bola Tinubu had proposed the sale of crude to local refineries in naira and it was adopted by FEC to sell crude to Dangote and other refineries in naira.
FEC approved that the 450,000 barrels meant for domestic consumption be offered in naira to Nigerian refineries, using the Dangote refinery as a pilot.
It also approved an initial six-month trial period pending further review by the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency.
However, Punch newspaper, had reported in October, that four cargoes of crude oil were delivered to the refinery and that the refinery was still waiting to receive more crude oil cargo.
According to the newspaper, a month later, the Vice President of Dangote Industries Limited, Devakumar Edwin, said the amount of crude received from the national oil firm was “peanuts” compared to the volume needed to ramp the production of refined products.
He said NNPCL had yet to meet its target to deliver a minimum of 385,000 bpd since the commencement of the programme in October, whereas Dangote refinery needed 650,000 barrels per day. NNPCL agreed to give a minimum of 385,000 bpd, but they are not even delivering that.
Dangote refinery had therefore resorted to crude oil imports to ramp up its production capacity and commence export to West African countries.
READ MORE; Averting Fuel Scarcity: Dangote, PETROAN Hold Talks On Price, Volume, Others
This development was confirmed by the IPMAN National Publicity Officer, Chinedu Ukadike, who also called on the refinery to consider reducing prices to foster healthy competition within the sector.
Ukadike, on Saturday, acknowledged that the 650,000-barrel facility would set its price based on production costs, although the foreign exchange rate remains a significant factor in determining its ex-depot price.
He said, “The cost of production is peculiar to any refinery, and for Dangote analysis, I think the refinery would have to be further reviewed because you would also remember that in one month, the facility has reviewed its processes twice. It dropped the price from N990 to N980 and then reduced it further to N970.
“This situation is a classic example of the deregulation process. Factors of demand and supply, as well as factors of production cost and sourcing, will determine price.
“Also, remember that the benchmark for petroleum products is foreign exchange. Remember, too, that the naira gained recently. This would normally affect the domestic market, especially the price of goods and commodities, including oil and gas.
“You can’t waive the fact that what is happening in Nigeria is a healthy development. Whether Dangote will reduce its price. That is sacrosanct, but he will.”
The IPMAN national officer added that the Nigerian Midstream and Downstream Petroleum Regulatory Authority should be commended for halting monopolistic plans, which had, in turn, fostered healthy competition and pricing.
READ MORE; PENGASSAN Confirms Port Harcourt Refinery is working.
“The naira-for-crude initiative is still based on foreign exchange, the volume of crude oil the Federal Government has allocated to the refinery since inception and what the production is.
“I have also heard from a great authority that Dangote is still importing crude from the USA. If my assertion is correct, it means that domestic intervention may not be able to encourage lower prices,” he added.
Responding to the disappointment of Nigerians that the naira-for-crude initiative has not reduced petrol prices, he retorted, “No, it is healthy; it will continue to make the sector better, like the telecommunications sector. Now, we are no longer talking about scarcity; what we are talking about is pricing. The issue of scarcity is gone, which was one of the factors that made the price of petroleum products go high. All things being equal, we will reap the benefit of deregulation.
“These things are done for the benefit of Nigerians, and marketers are committed to anything that would alleviate the suffering of people queueing for fuel. Remember, this is a festive period, and fuel needs to be available at a cheaper rate.”
However, the Petroleum Products Retail Outlets Owners Association of Nigeria National President, Billy Gillis-Harry, stated that the association would not be swayed by the reduced landing costs to consider importing petroleum products.
READ MORE; Marketers Threaten To Boycott P’Harcourt Refinery As NNPCL Juggles Petrol Price
He said, “Please, you people should forget about importation for now. We are not importing, and we have all made a decision not to bother about importing except Dangote and Port Harcourt refineries are unable to meet our fuel demand.
“Importation is cheaper for us at PETROAN, but we are not going to do that because we have promised the president that we would not import
“Recall that we had negotiated with some partners to import, and we are not even paying in advance. We negotiated an agreement of $70m just for import. They were to bring in products, and when we bought, we would pay back in naira, but we had to stop all of that.
“The issue of import should be kept in the cooler for now, and let us see what will happen after our meeting in January if our demands on product offtake will be met.
“NNPCL has called us to start applying for products from the Port-Harcourt depot. So, there are quite a lot of benefits.”
