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Fuel Crisis: Why oil marketers propose N550/litre to Dangote Refinery –IPMAN, Experts

*Abubakar Migandi Garima, President of Independent Petroleum Marketers Association of Nigeria, and other industry stakeholders highlight the benefits of oil dealers’ ongoing discussion with Dangote Oil Refinery and Petrochemicals, centering on pricing, margins and related matters in the downstream petroleum sector of the economy

Gbenga Kayode | ConsumerConnect

As the Dangote Oil Refinery and Petrochemicals is set to round off production and activate distribution of petroleum products across the country, Nigerian oil marketers have intensified efforts at taking final decisions on pricing and delivery of petrol to filling stations nationwide.

Dangote Refinery, designed with a capacity to refine 650,000 barrels per day (bpd) of crude oil, is commencing production and distribution of the product  by May 2024.

ConsumerConnect reports the NNPC Limited, at the weekend, had said it made efforts at ending the fuel scarcity experienced in several parts Lagos State.

Commenting on the scarcity in the commercial nerve centre of the country, Mr. Olufemi Soneye, Chief Coporate Communications Officer at NNPC Limited, on Sunday said: “NNPC Retail Limited, our retail arm, has since resolved the issue and effective tomorrow (Monday, April 8), normalcy will be restored within the affected area in Lagos.

It was also gathered both Dangote Refinery and oil marketers, Saturday, April 7, 2024, stated they have been meeting and exchanging notes on the pricing, distribution and margins to stakeholders in the value chain, including transporters and insurers in the West African country.

Currently, oil depot owners lift the product from NNPC Limited at N556 per litre and sell to independents at N640 per litre, according to report.

Independent marketers reportedly have proposed N550 per litre to Management of Dangote Refinery, who is currently in a discussion with the oil dealers.

We’ve proposed N550 per litre —Marketers

Confirming the details of their discussion with Dangote Refinery at the weekend, Alhaji Abubakar Migandi Garima, President of Independent Petroleum Marketers Association of Nigeria (IPMAN) was quoted to have disclosed: “We have been discussing with Dangote Refinery. The discussion, centering on pricing, margins and other issues, is still ongoing.”

Alhaji Garima said: “We have proposed that the lifting price should be N550 per litre in Lagos.

“The price of the product will differ from one part of Nigeria to another because of distance and cost of delivering petrol to different locations.”

The President of IP MAN also noted: “We are currently waiting on Dangote Refinery to conclude and communicate the price per litre, so we can plan to lift the product when it comes on stream.

‘’We expect that the price of the locally refined petrol would be cheaper than imported petrol, due mainly to local availability of the bulk of its crude oil and removal of transportation cost.”

Dangote Refinery, an opportunity for consumers to enjoy cheaper prices –Stakeholders

Meanwhile, industry experts and fuel consumers have expressed desire to enjoy benefit of domestic refining in regard to the coming on stream of Dangote Oil Refinery.

Prof. Wumi Iledare, Executive Director of Emmanuel Egbogah Foundation for Petroleum and Energy Industry Economics and Policy Advocacy, opined that the coming on stream of Dangote Refinery presented an opportunity for Nigerians to enjoy cheaper prices of petrol now or later.

The expert stated: “The price of petroleum is majorly correlated with the acquisition cost of crude oil.

“The cost of running the refinery and opportunity cost of capital contribute marginally.”

Prof. Iledare also asserted: “Distribution and retailing costs are important but the crude cost matters the most.

‘’Thus, low price of petrol in Nigeria when Dangote Refinery operates at full capacity, is a possibility indeed, ceteris paribus.”

Commenting on the development, a motorist, who preferred anonymity also told Vanguard: “Most people have stopped driving every day. That is why we do not experience much traffic in the cities, including Lagos anymore. “I am pleased that the Dangote Refinery will soon supply petrol. We hope and pray that it will be cheaper than the imported product.”

On the need for more fund to complete new refineries  in Nigeria, Mr. Momoh Oyarekhua, President of Crude Oil Refinery Owners Association of Nigeria (CORAN) reportedly said: “The coming on stream of Dangote Refinery is a very good development, especially as it will reduce huge dependence on imported petrol, conserve foreign exchange and create additional jobs.

“The government needs to support the construction of other indigenous refinery projects, currently at different stages nationwide.”

Oyarekhua noted: “We have proposed the creation of $1 billion fund to support local investors.

‘’If this is done, lack of funds, which has always been a major challenge, would to some extent be addressed.

“The Federal Government and other stakeholders, including the Nigerian Midstream, Downstream Petroleum Regulatory Authority (NMDPRA) should engage with indigenous investors to explore the best ways and means of bringing this into reality in the best interest of oil and gas industry and the nation’s economy.”

We expect sector wide impact –Muda Yusuf

In his remarks, Dr. Muda Yusuf, Chief Executive Officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), said: “If we are able to take advantage of Dangote Refinery to reduce our consuming products, it will go a long way in easing the country’s Foreign Exchange crisis.

“However, it would also make positive impact across all sectors.”

NNPC urges consumers against panic buying of petroleum products

As regards the recent scarcity of fuel in some parts of Lagos and environs, Soneye, the Company’s Spokesman also stated: “The NNPC Limited wishes to inform the general public that the tightness in Premium Motor Spirit, PMS, supply witnessed in some filling stations in Lagos was a result of an issue in one of the depots in the area.

“NNPC Limited calls on motorists in Lagos to avoid panic buying of PMS as all hands are on deck to sustain sufficiency in the supply of petroleum products in the area.”

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