The Independent Petroleum Marketers Association of Nigeria has called for a reduction in petrol prices across the country. The group urged Dangote Refinery to consider lowering its ex-depot price from N970 per liter, as the estimated cost of landing petrol in Nigeria has dropped to N900.28 per liter. During a Federal Executive Council (FEC) meeting on July 29, President Bola Tinubu proposed the sale of crude oil to local refineries in naira. The FEC adopted this proposal, authorizing the sale of crude to Dangote and other refineries in the local currency. The Council approved that 450,000 barrels intended for domestic consumption be sold in naira to Nigerian refineries, with Dangote Refinery serving as a pilot project. A six-month trial period was also approved, pending a further review by the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency.
“From October 1, NNPC will commence the supply of about 385,000 barrels per day of crude oil to the Dangote refinery to be paid for in naira,” the committee had declared.
This means that NNPC is expected to supply approximately 11.5 million barrels of crude oil to Dangote Refinery each month, totaling over 23 million barrels in two months. However, sources familiar with the local crude sale agreement told our reporters on Saturday that the deal is still in progress, despite limited information regarding the volume of crude traded during this period.
A source said, “There is no information to the contrary, which means the deal is still on. If it had been suspended or ended, you would have seen a statement from the parties involved or the committee in charge announcing that the deal was no longer working. It means if there is no statement, the deal is still ongoing.”
Efforts to reach the Nigerian National Petroleum Company Limited and the Dangote Refinery on the amount traded between parties proved abortive as the NNPCL spokesperson, Femi Soneye, did not respond to enquiries.
But in an interview 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.
“We need 650,000 barrels per day. NNPCL agreed to give a minimum of 385,000 bpd, but they are not even delivering that,” the official informed Reuters.
Meanwhile, the 650,000-barrel refinery has resorted to crude oil imports to ramp up its production capacity and commence export to West African countries.
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, speaking in an exclusive interview with our correspondent 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.
“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.
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. If Dangote and Port Harcourt refineries do not give us what we want, that is when we will come back to talk about importation.
“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.”
