June 10, (THEWILL)- Oil marketers under the aegis of the Major Energy Marketers Association of Nigeria (MEMAN) have faulted projections by operators of modular and conventional refineries that the pump price of Premium Motor Spirit (PMS), otherwise known as petrol or fuel, may crash to N300 per litre.
THEWILL reports that the Crude Oil Refinery Owners Association of Nigeria (CORAN) had said on Sunday, through its Publicity Secretary, Eche Idoko, that petrol price is expected to drop to around ₦300 per litre once the Dangote Petroleum Refinery and other local producers begin large-scale production.
Idoko told Punch that the reduction in diesel costs following Dangote’s production would similarly occur for petrol prices once it is produced extensively in Nigeria.
Noting that achieving this price drop would depend on the government’s ability to supply sufficient crude oil to local refiners, Idoko said that with adequate crude oil supply, producing PMS in large volumes could reduce the pump price to N300/litre, benefiting Nigerians instead of importers.
“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 N300/litre as the pump price.
“Why make Nigerians buy it at almost N700/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?
“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?
“As I speak to you now there is every tendency that before December diesel prices will drop further. The only reason why diesel is not doing below N1,000/litre is because of our exchange rate.
“If the exchange rate drops, diesel will drop below the N1,000/litre price. Now the exchange rate concern is because Dangote imports crude. If he is not importing, the exchange rate may not have so much effect, though he is still buying crude in dollars (in Nigeria) anyway.
“We have told them (government) that even the dollars that you are asking us to use and buy this product, it is detrimental to the country. 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.
“Get crude to local refineries, allow crude purchase in naira equivalent, make the environment business-friendly and watch locally produced petroleum product prices crash,” he said.
But faulting the projection, Tunji Oyebanji, a former MEMAN chairman and current CEO of 11 Plc, told Channels Television on Monday that petrol prices could not drop to N300 per litre.
He argued that since crude oil (the raw material for PMS) is priced in dollars, a substantial price reduction is unlikely.
He explained that “one barrel of crude oil contains 159 litres and costs about $80. Multiplying this by ₦1,400 gives you N112,000 per barrel, which, when divided by 159, results in ₦702 per litre of crude alone, excluding refining, transportation, finance costs, and distribution margins”.
