Local Refining May Crash Petrol Price to N300/litre – Modular Refineries

 

Operators of modular refineries under the aegis of the Crude Oil Refinery Owners Association of Nigeria have assured that Premium Motor Spirit, popularly called petrol will drop to about N300/litre with the commencement of massive production by the Dangote Petroleum Refinery and other indigenous producers.

 

The operators of modular refineries stated this on Sunday, according to Punch.

 

However, they pointed out that this would be achieve when the government ensures the provision of adequate crude oil to local refiners, stressing that refineries abroad were ripping off Nigeria.

 

Speaking under the aegis of the Crude Oil Refinery Owners Association of Nigeria, they explained that what happened to the cost of diesel after Dangote started producing it, would happen to petrol price once it is being produced massively in Nigeria.

 

CORAN is a registered association of modular and conventional refinery companies in Nigeria.

 

“A lot of companies today benefit from the importation of petroleum products at the expense of Nigerians,” the Publicity Secretary, CORAN, Eche Idoko, stated.

 

He told Punch correspondent that “if we begin to produce PMS today in large volumes, provided there is adequate crude oil supply, I can assure that we should be able to buy PMS at N300/litre as the pump price.

 

 

When told that there are arguments that it is not possible to have such a drop in price because crude oil, the raw material for PMS, is price in dollars, the CORAN official insisted that petrol price would crash once it is being produced massively by indigenous refiners.

 

He said, “We were selling diesel for N1,700 to N1,800/litre, but as soon as Dangote refinery started production he brought down the price to N1,200/litre. What other proofs do you need?

 

On May 18, 2024, The PUNCH reported that Africa’s richest man, Aliko Dangote, stated that following the laid-down plans of the Dangote refinery, Nigeria would no longer need to import petrol starting June this year.

 

Dangote had also stated that his refinery could meet West Africa’s petrol and diesel needs, as well as the continent’s aviation fuel demand. He spoke at the Africa CEO Forum Annual Summit in Kigali, expressing optimism about transforming Africa’s energy landscape.

 

“Right now, Nigeria has no cause to import anything apart from gasoline (petrol) and by sometime in June, within the next four or five weeks, Nigeria shouldn’t import anything like gasoline; not one drop of a litre,” the billionaire had declared.

 

Also, Dangote had earlier in the year crashed the pump price of diesel to N1,200/litre when the commodity was selling at between N1,700 and N1,800/litre at the time.

 

He further dropped the price to below N1,000/litre, but could not sustain this price due to the rise in exchange rate. The refinery eventually returned the price to the initial rate of N1,200/litre.

 

Speaking on Sunday, the CORAN spokesperson stated that this was why the modular refiners had been calling for the sale of crude oil at the naira equivalent of the dollar rate.

“Get crude to local refineries, allow crude purchase in naira equivalent, make the environment business-friendly and watch locally produced petroleum product prices crash,” Idoko stated.

 

Nigeria currently has 25 licensed modular refineries. Five of them are operating and producing diesel, kerosene, black oil and naphtha. About 10 are under various stages of completion, while the others have received licences to establish.

 

Operators of modular refineries earlier stated that aside from the five that are in operation currently, the remaining plants are embattled due to the major challenge of crude oil unavailability, a development that has stalled funding from financiers.

 

“A guarantee that if they finish the refinery, they are going to get feedstock, which, of course, is crude oil,” Idoko had explained.

 

Oil marketers also believe that the cost of petrol should be lower than its current price once its production begins in Nigeria.

 

They welcomed the comment of Dangote that his refinery should start pumping out petrol this month, and expressed hope that the cost would be less than the price which the Nigerian National Petroleum Company Limited currently sells.

 

“We expect a reduced price for locally produced PMS, as I’ve earlier told you,” the National President, Independent Petroleum Marketers Association of Nigeria, Abubakar Maigandi, stated.

 

Maigandi, while speaking from Saudi Arabia with our correspondent on Sunday, also stated no date has been communicated to marketers on when Dangote would release petrol to the market. Officials of Dangote refinery have remained mute on this.

 

“It is a welcome development if the refinery can start releasing PMS this month because as marketers we are currently set to start buying the product from the plant,” Maigandi stated.

 

The IPMAN president earlier stated that marketers were discussing with the managers of the plant, but not specifically on petrol pricing.

 

“It is true that we have started buying diesel from them, but you have to register with the company first. So a general registration is ongoing,” he explained.

 

Maigandi, however, stated that though marketers had yet to receive the projected price for petrol from the plant, dealers would want to see a PMS price of about N500/litre from the Dangote refinery.

 

“We are looking at having it (PMS) at any price below the NNPC rate. The price which NNPC sells petrol is N565.50/litre, so we are expecting something below that price, maybe around N500/litre,” Maigandi stated.

 

The oil dealers also joined in the call for the provision of crude oil to local refiners, stressing that this would impact positively on the prices of refined petroleum products.

 

“Of course, it is important for crude to be made available to local refineries because this will surely affect petroleum products’ prices positively,” the IPMAN president stated.

 

The spokesperson of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, George Ene-Ita, said he was sure that the government has guidelines for the provision of feedstock (crude) to indigenous refiners.

 

Ene-Ita promised to provide additional information on the matter, as he stated that he could not give further details at the time he was contacted by our correspondent.

 

Recall that the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, had earlier promised that the government would ensure that crude oil was supplied to domestic refiners.

 

He stated that in compliance with the provisions of Section 109(2) of the Petroleum Industry Act 2021, the NUPRC in a landmark move, had developed a template guiding the activities for Domestic Crude Oil Supply Obligation.

 

“This is in a bid to foster a seamless implementation of the DCSO and ensure consistent supply of crude oil to domestic refineries,” Komolafe had stated.