How Dangote refinery can impact 15% reduction on PMS price-experts

THE commencement of Production at the Dangote Refinery and Petrochemical Company could influence a 15 per cent price reduction of Premium Motor Spirit (PMS) also known as gasoline, analysis from some energy experts has shown.

Analysis from industry sources has shown that freight, logistic costs, shipment, and storage costs would impact the 15 per cent reduction in the price of gasoline for Nigerians, which currently sells at above N630 in most filling station retail outlets.

Nigeria spends N843 billion monthly on gasoline importation which puts pressure on its scarce dollar and poses a serious trigger to its currency problems.

The Nigerian National Oil Company-(NNPCL) has been the sole importer of gasoline in the country, a situation that has raised several unanswered questions about the transparency of the process.

“With the commencement of the Dangote refinery, Freight, logistics, insurance, financing, transportation, shipments, and import parity price will reduce the cost to almost by 10- 15 per cent. This is a good development for Nigeria’s energy security in Nigeria,” an Energy Economics Professor, Adeola Adenikinju, told THE ICIR.

Apart from addressing energy security and meeting local fuel consumption targets, Adenikinju said Nigeria could address its foreign exchange problems by saving dollars from its persistent petroleum imports.

A former President of the Major Oil Marketers Association of Nigeria (MOMAN), Adetunji Oyebanji, said the possible impact on price reduction of PMS depends on when gasoline production fully starts at the company.

Commenting on possible price reduction, he said, “We often carry crude to Europe for refining and pay for freight costs to bring it back to Nigeria. That cost would now be saved. The price reduction would also be impacted by whether payment for crude transactions with Dangote is made in US dollars or Naira by the NNPCL, which holds a 20 per cent share in the company,” he said.

Recall that the Dangote Refinery and Petrochemical Company announced on Friday, January 12, that the refinery received the fifth crude oil shipment of one million barrels of Bonny Light supplied by the Nigerian National Petroleum Corporation Limited last week.

The 650,000 barrels-per-day oil processing facility started operations in May 2023.






     

     

    It is designed to process crude oil grades from the three continents of Africa, Asia and America.

    The Managing Director of Dangote Ports Operations, Akin Omole, had told newsmen on Friday, January 12, at the Dangote Quay in Ibeju-Lekki, Lagos, that an ample supply of crude will enable the refinery to start operating smoothly.

    “Once the six million barrels are fully delivered, it will facilitate the initial run of the refinery as well as kick-start the production of diesel, aviation fuel, and LPG before subsequently progressing to the production of Premium Motor Spirit,” he added.

    The refinery, first scheduled to open in 2021, was officially inaugurated by then-President Muhammadu Buhari in 2023.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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