- Nigerians pin Hope on Dangote, PH Refineries
By Ayomide Joseph
The National Bureau of Statistics (NBS), has revealed that the average retail price of fuel experienced a staggering 225.85% increase in December 2023, soaring to N671.86 per litre from the N206.19 recorded in December 2022.
According to the NBS report released on Thursday, there was a month-on-month rise of 3.53%, with the pump price escalating from N648.93 to the current N671.86 per litre.
The report stated, “The average retail price paid by consumers for Premium Motor Spirit (Petrol) for December 2023 was N671.86, indicating a 225.85% increase compared to the value recorded in December 2022 (N206.19). Similarly, comparing the average price value with the previous month (i.e., November 2023), the average retail price increased by 3.53% from N648.93.”
Breaking down the data on a state level, Ogun State reported the highest average retail price at N776.54, followed by Taraba and Adamawa States at N760.00 and N745.71, respectively. Conversely, Kano, Lagos, and Borno States posted the lowest average retail prices at N602.78, N612.72, and N622.71, respectively. On a zonal scale, the North East Zone had the highest average retail price of N699.82, while the North Central Zone had the lowest price of N657.69.
Recall that upon taking office, President Bola Tinubu promptly removed fuel subsidy. The decision resulted in an unprecedented increase in the pump price of fuel, from N189 per litre to more than N600, which it currently sells.
Despite this, there is optimism for a potential drop in fuel prices with the rehabilitation of the Port Harcourt refinery and the commencement of operations at the Dangote Refinery.
On December 21, the Port Harcourt Refining Company Limited (PHRC) announced the mechanical completion and flare start-up of operations. Phase two is set to commence in 2024, boasting a total refining capacity of 210,000 barrels per day from two refining units.
Also, the Dangote Refinery, recognized as the world’s largest single-train refinery, commenced operations last week Friday. Initial production at the refinery will prioritize diesel and aviation fuel, followed by petrol production.
While expectations for a marginal reduction in petrol prices exist due to the elimination of certain ancillary costs, experts caution against anticipating a significant price crash.
The elimination of ancillary costs such as freight and port charges may lead to a slight reduction, as highlighted by Associate Professor Olanrewaju Aladeitan of the University of Abuja.
Conversely, some experts suggest that the operation of both refineries may result in a slight decrease in petroleum product costs rather than a substantial price reduction.
Billy Gillis-Harry, President of Petroleum Products Retail Outlets Owners Association (PETROAN), remains optimistic that the Dangote refinery’s operation will positively impact the cost of refined products.
However, Clement Isong, Executive Secretary/CEO of the Major Oil Marketers Association of Nigeria (MOMAN), argues that the refining costs from both Dangote and Port Harcourt refineries constitute only a small part of the overall cost affecting fuel prices at the pump.
He maintains that a significant price drop, especially to N400, is unlikely.
