With the Dangote Petrochemical Refinery set to supply Premium Motor Spirit (PMS) or petrol to the Nigerian market in a few weeks, petroleum marketers are worried about the possibility of high prices. This fear stems from the refinery’s ongoing struggle to secure local crude oil and its reliance on more expensive imported crude.
The Dangote Refinery, with a capacity of 650,000 barrels per day, has faced challenges in sourcing crude oil locally from international oil companies (IOCs). As a result, it continues to import crude from the United States and other countries, which significantly raises production costs. These higher costs have already made Dangote’s diesel and aviation fuel less attractive to local marketers.
Aliko Dangote, Chairman of the Dangote Group, announced that PMS from the refinery would be available by mid-July. Many Nigerians hope this will lower the price of PMS, which surged from around N200 per litre to over N600 per litre after fuel subsidies were removed on May 29, 2023.
However, there are doubts about whether Dangote’s petrol will be cheaper. Hammed Fashola, National Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed concerns that the high cost of imported crude oil will increase the price of Dangote’s petrol. He noted, “The non-supply of crude is a big challenge for Dangote. You know Dangote cried out too. The international oil companies too will have their reasons; you know they have their commitments too. It’s not like they will start feeding Dangote only. People should understand that.”
Fashola suggested that the Federal Government should assist Dangote by providing local crude oil. He emphasized that if Dangote could secure local crude, it would solve many issues related to fuel availability and affordability. “I will advise that the government should assist Dangote in the supply of crude oil. If Dangote can get an adequate supply of crude oil locally, I think the whole problem will be solved somehow,” Fashola added.
He also urged Dangote not to monopolize the market or raise prices unfairly. “Dangote too should not see it as an advantage to start monopolizing the market by raising fuel prices. Dangote has to come with a clean mind by selling at a reasonable price to the public,” he said.
While awaiting Dangote’s PMS, the IPMAN leader called on the refinery to finalize partnership discussions with the association. Fashola mentioned that working together would benefit both Dangote and the marketers, who own most of Nigeria’s filling stations.
An anonymous source from the Dangote Refinery confirmed that Aliko Dangote had raised concerns about the IOCs, accusing them of making it difficult for the refinery to obtain local crude. The source explained that importing crude from the US adds to the costs, impacting the price of the final product.
Olufemi Adewole, Secretary of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), stated that the price of Dangote’s petrol would depend on how and where the refinery obtains its crude oil. He emphasized the need to wait for Dangote to announce the price before speculating.