The pump price of Premium Motor Spirit (PMS), commonly known as petrol, could drop to around N300 per litre with the commencement of large-scale production by the Dangote Petroleum Refinery and other indigenous producers, according to the Crude Oil Refinery Owners Association of Nigeria (CORAN).
This potential price reduction hinges on the government’s provision of adequate crude oil to local refiners, as refineries abroad currently profit significantly from Nigeria’s importation of petroleum products. Eche Idoko, Publicity Secretary of CORAN, emphasized that a local boost in production, similar to the effect seen with diesel prices after Dangote’s diesel production began, would drive down petrol prices.
“If we begin to produce PMS in large volumes and ensure adequate crude oil supply, we should be able to buy PMS at N300/litre,” Idoko stated. He noted that the current high prices benefit international refiners at the expense of Nigerians.
Despite skepticism about a price drop due to crude oil being priced in dollars, Idoko insisted that massive local production would lower costs. He pointed to the reduction in diesel prices as evidence, stating that diesel prices dropped from N1,700-1,800/litre to N1,200/litre after Dangote’s refinery began operations. However, diesel prices have fluctuated due to exchange rate issues, as Dangote imports crude oil.
On May 18, 2024, Aliko Dangote announced that Nigeria would cease importing petrol by June, with his refinery capable of meeting the petrol, diesel, and aviation fuel needs of West Africa. This follows a previous reduction in diesel prices to N1,200/litre, although prices rose again due to exchange rate impacts.
CORAN has called for crude oil to be sold to local refiners at the naira equivalent of the dollar rate, strengthening the naira and ensuring crude oil supply to local refineries to facilitate lower petroleum product prices.
Nigeria currently has 25 licensed modular refineries, with five operational and producing diesel, kerosene, black oil, and naphtha. However, crude oil availability remains a significant challenge, stalling the completion and financing of other refineries.
Oil marketers have expressed optimism about the potential price reduction with the start of local petrol production. Abubakar Maigandi, National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), anticipates a price below the current NNPC rate of N565.50/litre, potentially around N500/litre.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority and the Nigerian Upstream Petroleum Regulatory Commission have promised guidelines and support to ensure crude oil supply to domestic refiners. This includes a template for Domestic Crude Oil Supply Obligation to ensure consistent supply to local refineries.
