Petrol Prices Set to Drop to N300/Litre with Dangote Refinery’s Production Surge

The price of Premium Motor Spirit (PMS), commonly known as petrol, is anticipated to fall to approximately N300 per litre with the commencement of large-scale production by the Dangote Petroleum Refinery and other local producers. This projection comes from operators of modular refineries, who stress the importance of ensuring sufficient crude oil supply to domestic refiners to achieve this reduction.

Speaking under the banner of the Crude Oil Refinery Owners Association of Nigeria (CORAN), these operators highlighted that similar price drops witnessed in the diesel market following Dangote’s production could be replicated with petrol. CORAN, a registered association of modular and conventional refinery companies in Nigeria, underscored the economic benefits of local production.

“A lot of companies today benefit from the importation of petroleum products at the expense of Nigerians,” said Eche Idoko, CORAN’s Publicity Secretary. He noted that if local refineries were provided with adequate crude oil, petrol prices could drop significantly. “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,” Idoko explained.

Idoko criticised the current high petrol prices, attributing them to the influence of international refiners. He insisted that a massive local production of petrol would dramatically lower prices. “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 proof do you need?” he added.

Aliko Dangote, President of the Dangote Group, recently asserted that his refinery would start selling petrol in June, ending Nigeria’s reliance on imported petrol. Speaking at the Africa CEO Forum Annual Summit in Kigali, Dangote highlighted the transformative impact his refinery would have on Africa’s energy landscape. He stated, “Right now, Nigeria has no cause to import anything apart from gasoline 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.”

Dangote’s earlier move to reduce the diesel pump price from N1,700 to N1,200 per litre, although later adjusted due to exchange rate fluctuations, demonstrates the potential for similar impacts on petrol prices.

The CORAN spokesperson reiterated the call for crude oil to be sold at the naira equivalent of the dollar rate to support local refineries. “Strengthen the naira. We will buy at the international market rate, but at a naira equivalent. These are the issues and they know these things but we can’t explain why they really can’t take decisions to change these concerns,” Idoko stated.

Nigeria currently has 25 licensed modular refineries, with five operational, producing diesel, kerosene, black oil, and naphtha. The remaining refineries face significant challenges due to the unavailability of crude oil, which stalls financing and completion.

Oil marketers, welcoming Dangote’s announcement, expressed optimism that local production would reduce petrol prices. “We expect a reduced price for locally produced PMS,” stated Abubakar Maigandi, National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN).

George Ene-Ita, spokesperson for the Nigerian Midstream and Downstream Petroleum Regulatory Authority, confirmed that the government has guidelines for providing crude oil to indigenous refiners. Further details are expected to be provided on these guidelines.

Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, assured that the government would ensure a consistent supply of crude oil to domestic refineries, in line with the Domestic Crude Oil Supply Obligation template developed with stakeholders.

With these measures, local refineries could soon receive the crude oil necessary to produce petrol domestically, potentially bringing substantial relief to Nigerian consumers by significantly lowering fuel prices.