Marketers and energy experts in Nigeria’s oil and gas business have ruled out expectations of a price collapse ahead of Dangote Refinery’s start of Premium Motor Spirit, or petrol, supplies in the Nigerian market.

This coincides with the recent change in the anticipated start date of fuel supply from June to mid-July 2024 made by Aliko Dangote, the chairman of the refinery located in Lagos.

The wealthiest man in Africa, Dangote, attributed the change in the earlier commencement date to “a little bit of delay.”

Despite starting to provide diesel and aviation fuel in April, the company, officially launched on May 23 of last year, has been having trouble obtaining crude supplies for its petrol production.

Dangote claimed that the companies’ attempts to begin operations on a large scale are being hampered by cartels operating in the oil and gas industry.

Speaking to CNN and at the Afreximbank Annual Meetings in Nassau, Bahamas, the company’s head claimed that strong cartels wanted his business to fail.

Over the weekend, Devakumar Edwin, the vice president of Dangote Industries Limited, accused Nigerian international oil companies of undermining Dangote Refinery by refusing to sell crude oil. According to his allegations, IOCs are charging Dangote Refinery $6 more for crude oil than what is being sold on the open market.

Despite Nigeria’s natural oil endowment, he claims that the development has forced Dangote Refinery to look to the US for crude oil to be cracked in the country.

In contrast, the Lagos State Chamber of Commerce and Industry responded to Dangote’s accusation on June 9, 2024, blaming pipeline vandalism and oil theft for the IOCs’ insufficient delivery of crude to Dangote.

In response to Dangote’s June 1st charge, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) it is said through its spokeswoman, Mrs. Olaide Shonola, that the Commission will guarantee that independent contractors (IOCs) supply crude oil to the Dangote Refinery.

Weeks after NUPRC’s guarantee, the Dangote refinery is still adamant that the IOCs refrain from providing crude to the business. This rendered the start date of Dangote Refinery’s petroleum supplies to the Nigerian market uncertain. Even still, Dangote was adamant about mid-July.

While the discussion about the difficulties Dangote Refinery faces continues, Nigerians’ main worry has been the potential for fuel price reductions due to local product supply, despite the opinions of certain stakeholders.

Remember that once the gasoline subsidy was removed last year, the average price of petrol rose from N238 in May 2023 to N769.62 in May 2024.

Along with additional measures implemented by President Bola Ahmed Tinubu’s administration, Nigeria’s headline and food inflation rates have increased to 33.95 per cent and 40.66 per cent, respectively. Nigerians’ purchasing power has decreased, and the misery index has risen.

Billy Gillis-Harry, President of PETROAN, the Petroleum Products Retail Outlets Owners Association, stated in a Monday exclusive interview with DAILY POST that the fuel from the Dangote refinery will not cause a price collapse for the product.

He claims that although there were expectations that the price would plummet when Dangote Refinery’s aviation fuel and automotive petrol oil reached the Nigerian domestic market, it did not.

This is because, despite the Dangote refinery’s declaration of a diesel price reduction for traders, Nigerians ended up buying the product at N1403.96.

Gillis-Harry continued by saying that Nigeria’s fuel prices may rise when the supply of petroleum begins as long as Dangote Refinery exports crude there.

“I will tell you that Dangote Refinery when it is fully operational and we do hope that projection is correct, because we have had several projections in the past that never come to pass.

“It becomes difficult to premise our thoughts on projections. When diesel came, we hoped it would be the solution to Automotive Gas Oil, AGO, high prices in the country but we did not see that.

“We have been expecting PMS to be rolled out at Dangote Refinery. If it is rolled out in the Refinery, you will first ask yourself very critical questions, where is he getting crude oil from?

“If he is importing crude from the US to crack in Nigeria, are you expecting the price of PMS to come down? That will also be the same thing we have been doing.

‘You have to source for FX to buy crude oil that he will come to crack in Nigeria and sell fuel in Naira. The foreign exchange will continue to fluctuate. There is no way you will expect that the price of fuel will crash. This said, it is doubtful that Dangote’s fuel will enjoy any form of subsidy by the Federal Government”, he said.

He said a subsidy was applied, so the petrol pump price was N700 per litre.

“There is nothing like quasi-fuel subsidy, the subsidy is applied, it is applied. The only thing is that Nigerians deserve to know the value of the fuel subsidy spent.

“We can’t be spending Trillions of the commonwealth of Nigeria and we do not know what it is we are spending it for, why we are spending and what is the result when we thought that in the last year, we  have not been subsidizing PMS.

“With Dangote’s PMS, I doubt we will enjoy such a subsidy regime. It is selling at a free-market price based on the value of Naira to Dollar at the time. I rather expect that the price of PMS will go up.

“We do hope that quality meets what we are consuming in Nigeria and if that happens, the product should be available. When there is product availability, productivity in different sectors is guaranteed”, he explained.

According to him, there is a lack of confidence among oil marketers regarding the opening of refineries in Port Harcourt, Kaduna, and Warri.

“We don’t have strong confidence in the full-scale commencement of Port Harcourt and Kaduna refineries.

“Because the commencement date has been shifted so many times. I find it difficult to comment about the refinery kick-off”, he said.

If NNPCL will leave the supply market after the Dangote refinery enters the fuel supply, Gillis-Harry stated that the company’s chairman is free to explore his business options.

He said oil marketers don’t have strong confidence in the commencement of Port Harcourt, Kaduna and Warri Refineries.

“We don’t have strong confidence in the full-scale commencement of Port Harcourt and Kaduna refineries.

“Because the commencement date has been shifted so many times. I find it difficult to comment about the refinery kick-off”, he said.

Speaking on whether NNPCL will exit the supply market upon the entrance of the Dangote refinery into the supply of fuel, Gillis-Harry said the chairman of the company is free to prospect his business opportunities.

“He (Dangote) is a businessman, he’s anticipating business opportunities that could give him semi-monopoly, so there is nothing wrong with him speculating and expecting NNPCL to say we are not going to import fuel again,” he noted.

He, however, urged that “the Decision of NNPCL still affects Nigerians and Nigeria’s commonwealth. I anticipate we should have stakeholder input into how some of these decisions are arrived at.

“So NNPCL can say that we are not importing fuel again because now that they are the sole importer we are still having hiccups. What I see is that Dangote Refinery will be a solution to shortfalls in the supply of PMS, not a price cut. Unless it (Price cut) will be a trade entrance strategy”, he told ZINGTIE.

Please don’t forget to “Allow the notification” so you will be the first to get our gist when we publish it. 
Drop your comment in the section below, and don’t forget to share the post.