Petrol Price Drop to N300/ltr Unfeasible, Say Oil Marketers

Why the price of petrol can't fall to N300 per liter  according to Oil marketers

Oil marketers debunk reports of petrol price dropping to N300/ltr, citing foreign refinery exploitation and crude oil supply inconsistencies. Local refining can reduce prices, but exchange rates and production costs must be considered.

A group of oil marketers has refuted reports claiming that local crude oil refining might lower the pump price of gasoline to as low as N300 per litre and explained why the price of gasoline can't fall as low as N300 per litre.

In response to a report claiming that after the Dangote Petroleum Refinery and other indigenous modular refineries began large-scale production, the pump price of Premium Motor Spirit (PMS) would decrease to about #300 per litre, the Major Energy Marketers Association of Nigeria (MEMAN) issued a statement.

The marketers pointed out that foreign refineries were taking advantage of Nigeria and underlined that this reduction could only occur if the government guaranteed a consistent supply of crude oil to regional refineries.

The Crude Oil Refinery Owners Association of Nigeria (CORAN) Publicity Secretary, Eche Idoko, said, “Many companies today benefit from the importation of petroleum products at the expense of Nigerians.”

Idoko continued, “If we start producing PMS in large volumes with adequate crude oil supply, I can assure you that the pump price could drop to #300 per litre. Why make Nigerians pay almost #700 per litre when allowing local refineries to operate would reduce the price? Is it to satisfy global refiners profiting from us?”

Tunji Oyebanji, the CEO of 11 Plc and a former chairman of MEMAN, on the other hand, stated on Channels Television on Monday that gas prices would not be able to fall to $300 per liter.

He explained, “One barrel of crude oil contains 159 litres and costs about $80. Multiplying this by #1,400 gives you #112,000 per barrel, which, when divided by 159, results in #702 per litre of crude alone, excluding refining, transportation, finance costs, and distribution margins.”

Oyebanji's perspective defies CORAN's claim that gas costs would fall dramatically. He contended that a significant price drop is improbable because PMS's primary ingredient, crude oil, is priced in dollars.

He mentioned, “We were selling diesel for #1,700 to 1,800 per litre, but as soon as Dangote refinery started production, the price dropped to #1,200 per litre.”

This suggests that price reductions are possible. The current exchange rate prevents diesel costs from going below $1,000 a litre, even if they could still decline. Diesel prices may fall below #1,000 per liter if the currency rate stabilizes.

Dangote might lessen the effects of currency rate fluctuations by not importing, even while he purchases crude in dollars within Nigeria.

Aliko Dangote, the richest man in Africa, declared on May 18, 2024, that Nigeria would stop importing gasoline in June of this year as a result of the plans for the Dangote refinery.

Dangote stated during the Africa CEO Forum Annual Summit in Kigali that he was optimistic about changing the energy landscape of the continent and that his refinery could supply all of West Africa's demands for gasoline and diesel as well as aviation fuel.

He said, “By June, Nigeria should not need to import any gasoline; not even a single drop.” In the beginning of this year, Dangote lowered the pump price of diesel from $1,700 to ₯1,800 per liter. However, he was forced to increase the price again to $1,200 per liter because of swings in exchange rates.