By Tolúlopé Olátúnjí
Major Energy Marketers Association of Nigeria (MEMAN) has countered reports suggesting that local refining of crude oil could reduce the pump price of petrol to ₦300 per litre on the commencement of massive production by the Dangote Petroleum Refinery and other indigenous producers, including operators of modular refineries.
MEMAN, on Monday, stated that achieving such a reduction would depend on the government’s ability to ensure an adequate supply of crude oil to local refineries. The organization noted that foreign refineries were significantly profiting at Nigeria’s expense.
While responding to report of possible reduction in cost of petroleum products , the Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria (CORAN), Eche Idoko said: “A lot of companies today benefit from the importation of petroleum products at the expense of Nigerians”
“If we begin to produce PMS today in large volumes, provided there is adequate crude oil supply, I can assure you that we should be able to buy PMS at ₦300 per litre as the pump price”, he added
Idoko questioned the rationale behind selling petrol at nearly ₦700 per litre when local refining could potentially reduce the price.
He asked, “Why make Nigerians buy it at almost ₦700 per litre when you know that if you allow refineries to work, the price will come down? Is it because you want to satisfy the global refiners abroad that are making so much from us?”
On the contrary , the former Chairman of MEMAN and current CEO of 11 Plc, Tunji Oyebanji, on Monday said that it was unrealistic to expect petrol prices to drop to ₦300 per litre.
He analyzed the cost structure of crude oil: “One barrel of crude has 159 litres. Currently, a barrel is about $80. Multiply that by ₦1,400, and you get ₦112,000 for a barrel of crude. Divide ₦112,000 by 159, and it gives you ₦702 per litre of crude only.”
Oyebanji added: “No refining, no transportation, no finance cost, and no distribution margins. Just ordinary crude is ₦702.”
Oyebanji’s analysis challenges CORAN’s executive assertion that petrol prices would plummet with local refining. He argued that crude oil, the primary raw material for PMS, is priced in dollars, making significant price reductions unlikely.
“We were selling diesel for ₦1,700 to ₦1,800 per litre, but as soon as the Dangote refinery started production, it brought down the price to ₦1,200 per litre. What other proof do you need?”, he asked
Furthermore, Oyebanji noted that the potential for further diesel price reductions by December is hinged on the stability exchange rate, which affects prices because Dangote and others still imports crude.
Recall that on May 18, 2024, Aliko Dangote, Africa’s richest man, had announced that Nigeria would no longer need to import petrol if all things work according to plan.
