Dr. Thomas Ogungbangbe, Chief Executive Officer of CITA and an oil industry expert, has stated that the roll-out of petroleum products from Dangote Refinery will not lead to price reductions but will ensure product availability.
Speaking to our correspondent, Dr. Ogungbangbe emphasized that the global price of fuel would make it difficult for any company other than the government to purchase products from Dangote.
“Like I said, Dangote would only ensure availability, it does not translate to any magical price reduction because Dangote refinery is a for-profit venture and it is also logging to the protocols of other refineries in the world,” he explained.
Dr. Ogungbangbe made these remarks following the roll-out of premium motor spirit (PMS), also known as petrol, from Dangote Refinery, with the Nigerian National Petroleum Company Limited (NNPCL) loading the product.
Fuel Pricing Under Global Standards
Dr. Ogungbangbe further explained that the only scenario where fuel prices could potentially decrease is through full market deregulation, allowing more operators to enter and foster competition.
However, he warned that a litre of petrol in Nigeria could reach as high as N1,500 if the government were to remove subsidies entirely.
“If there is deregulation and subsidy is removed, a litre of petrol will sell for as much as a dollar. The original price of petrol anywhere in the world is between 80 cents and one dollar. So as it is now, Nigeria is still one of the cheapest in the world due to government subsidies,” Ogungbangbe noted.
Government Subsidy and Dangote’s Pricing
Highlighting the pricing dilemma, Dr. Ogungbangbe suggested that Dangote would likely sell petrol for N1,200, N1,300, or even N1,400 per litre, raising concerns about affordability.
“Can people buy it? The government is using NNPC to come in the middle of arbitrage, trying to save the pocket of the people by taking some of the heat. This is why it is only NNPC that can buy PMS from Dangote because any other purchases would be for export,” he said.
According to Ogungbangbe, the current pricing model allows the government to offer almost 50% in subsidies, even with recent price increases.
“There is no other company that can buy it and make a profit. My advice for the government is to remove the subsidy completely because there is no way the government can survive at the going rate,” he concluded.
