With the landing cost of Premium Motor Spirit (PMS), commonly known as petrol, reaching N1,117 per litre, oil marketers have projected that the monthly subsidy on the commodity stands at approximately N707 billion.
As the Dangote Petroleum Refinery gears up for petrol production in August, there are indications that the company might export the product due to a crude oil supply crisis and regulatory challenges affecting the $21 billion firm.
In a recent meeting in Abuja, Minister of State for Petroleum Resources, Heineken Lokpobiri, discussed the ongoing issues with officials from the Dangote refinery, Nigerian National Petroleum Company Limited (NNPC), Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). The discussions centered around recent concerns between the Dangote refinery and oil sector regulators.
Simultaneously, the House of Representatives has inaugurated an investigative committee to probe the non-availability of crude oil to domestic refineries and allegations of deliberate cost hikes in the price of petrol for profit-making.
The Major Energies Marketers Association of Nigeria (MEMAN) recently reported that the landing cost of petrol was N1,117 per litre. The Independent Petroleum Marketers Association of Nigeria (IPMAN) asserted that the Federal Government is still subsidizing PMS, a situation deemed unsustainable and likely to result in higher pump prices.
MEMAN also revealed that the landing cost of diesel is N1,157 per litre and aviation fuel is N1,127 per litre. Despite this, the pump prices for diesel and aviation fuel are higher than their landing costs, whereas petrol pump prices remain significantly below its landing cost.
Retail outlets operated by NNPC and some major marketers sell petrol between N617 and N670 per litre, while the ex-depot price by NNPC is N585 per litre. Independent marketers often purchase petrol from private depot owners at higher rates, resulting in pump prices exceeding N700 per litre.
NNPC, being Nigeria’s sole petrol importer, has limited competition in the market, leading to claims that the sector has not been fully deregulated. This scenario perpetuates the petrol subsidy, despite government assertions to the contrary.
IPMAN Secretary Mohammed Shuaibu emphasized that the data from MEMAN indicates that petrol subsidy exceeds N700 billion monthly. He criticized the government's stance on subsidy removal and suggested that allowing market competition could potentially lower prices.
Former Kaduna State Governor Nasir El-Rufai previously remarked that the government had reintroduced the petrol subsidy to address implementation challenges and ensure pragmatic policy adjustments.
NNPC's Chief Corporate Communications Officer, Olufemi Soneye, did not respond to inquiries regarding the latest subsidy revelations but had previously stated that petrol subsidies had been discontinued. NNPC's GCEO Malam Mele Kyari had also denied the existence of subsidies, insisting that the company recovers full costs from product sales.
IPMAN's Public Relations Officer, Chief Ukadike Chinedu, countered these claims, arguing that petrol prices at the pumps should be significantly higher if not for the subsidy. He asserted that the high landing cost of petrol indicates ongoing government subsidy.
The Dangote refinery, set to begin petrol production soon, may consider exporting its products due to difficulties in sourcing crude oil and the high cost of importation. The company's decision to export could be influenced by the discrepancy between local market prices and production costs.
Energy expert Prof. Wumi Iledare suggested that the Dangote refinery's export plan is not problematic if it adheres to regulations. He argued that the refinery’s decision to sell locally depends on whether the Nigerian market can sustain the price.
The House of Representatives' newly inaugurated committee will conduct a forensic investigation into the issues plaguing the petroleum sector. The investigation will cover various aspects, including the resurgence of fuel queues, high PMS costs, and the quality of imported products.
Minister Heineken Lokpobiri’s recent meeting with key stakeholders was aimed at addressing and resolving the challenges surrounding the Dangote refinery. The discussions highlighted the importance of collaboration and a conducive environment for Nigeria’s oil and gas sector.
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