Fuel Price Set To Crash To N300 Per Litre As Dangote, Others Plan Mega Refining Operations

The price of Premium Motor Spirit (PMS), commonly known as petrol, is expected to drop to around ₦300 per litre once the Dangote Petroleum Refinery and other local producers begin large-scale production, according to operators of modular refineries.

This reduction is contingent on the government’s provision of adequate crude oil to local refiners, who argue that foreign refineries are currently profiting at Nigeria’s expense.

Speaking under the Crude Oil Refinery Owners Association of Nigeria (CORAN), the operators explained that the effect seen on diesel prices, following Dangote’s production, will similarly impact petrol prices once domestic production ramps up. CORAN is an association of modular and conventional refinery companies in Nigeria.

Eche Idoko, CORAN’s Publicity Secretary, emphasized that the current high petrol prices, nearing ₦700 per litre, could be significantly reduced if local refineries receive sufficient crude oil. He questioned why Nigerians should pay such high prices to benefit foreign refiners.

Addressing concerns that crude oil, the raw material for PMS, is priced in dollars, Idoko maintained that local production would still lower petrol prices. He pointed out the significant drop in diesel prices after Dangote’s refinery started production, suggesting a similar trend for petrol.

Idoko explained that diesel prices had fallen from ₦1,700-₦1,800 per litre to ₦1,200 per litre following Dangote’s intervention. Despite fluctuations due to exchange rates, the potential for further price reductions remains if crude oil is supplied locally and priced in naira.

In May 2024, Aliko Dangote, Africa’s richest man, announced that Nigeria would no longer need to import petrol by June this year, as his refinery could meet West Africa’s petrol and diesel needs. He expressed optimism about transforming Africa’s energy landscape.

Dangote’s intervention had previously lowered diesel prices to below ₦1,000 per litre, though it later stabilized at ₦1,200 per litre due to exchange rate issues. Idoko reiterated the need for the government to sell crude oil at the naira equivalent of the dollar rate to support local refiners and reduce petroleum product prices.

Currently, Nigeria has 25 licensed modular refineries, with five operational and producing various petroleum products. However, many others are stalled due to crude oil shortages, which have hampered funding from financiers requiring guarantees of feedstock supply.

Oil marketers also anticipate that locally produced petrol should be cheaper than current prices. The National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Abubakar Maigandi, welcomed Dangote’s plans to release petrol soon and expected prices to be lower than those set by the Nigerian National Petroleum Company Limited (NNPC).

While discussing registration and purchase logistics with the Dangote refinery, Maigandi highlighted that marketers are hopeful for a petrol price around ₦500 per litre, below the NNPC’s rate of ₦565.50 per litre. He emphasized the importance of providing crude oil to local refiners to positively impact petroleum product prices.