According to oil and gas expert Henry Adigun, production costs denominated in US dollars are one reason why the $20 billion Dangote Refinery in Lagos may not sell a litre of Premium Motor Spirit (PMS), also known as petrol, below the new pump price at Nigerian National Petroleum Company Limited’s retail outlets.
Adigun spoke on Inside Sources with Laolu Akande, a socio-political program aired on Channels Television on Friday.
He said that the petrol produced at the Dangote Refinery is the greatest in the world, and that higher quality means higher prices.
The expert stated that petroleum is a dollar-denominated business, and refinery owner and billionaire businessman Aliko Dangote should be free to set the price of petrol generated by his refinery.
Adigun said, “He (Dangote) has cost. The crude is given to him at a cost. He only gets 40% of the crude from NNPC, and spends money to buy the remaining from America and co. It’s a single-train refinery, you can’t use only one crude to produce all products. This is technical in a way.
“So, you have to blend American crude with Nigerian. That’s why, if Nigeria gives him all the barrels, he still has to import and blend them. People should not forget that.
“And I keep telling everybody, the man (Dangote) did not take the loan in naira; he took it in dollars and he has to pay the loans back in dollars.”
Asked if Dangote will sell a pump price of petrol at N700, the expert said, “He cannot. I did the mathematics of his refinery and I said it in the meeting we had with his people and his team that there is no way your petrol will come out at less than N850. There is also retail cost.”
Nigeria, Africa’s most populous country, is facing energy issues, with all of its state-owned refineries inoperable. The country relies significantly on imported refined petroleum products, with the state-owned NNPCL being the primary importer of these important commodities.
Fuel lineups are widespread throughout the country. Since the removal of subsidies in May 2023, petrol prices have tripled from around ₦200/litre to about ₦800/litre. This has compounded the woes of citizens who use petrol to power their vehicles and generate sets, due to the decades-long epileptic electricity supply.
Last December, Dangote, Africa’s leading industrialist, began operations at his $20 billion complex in Lagos, producing 350,000 barrels per day.
The refinery, which was previously hampered by regulatory disputes, wants to reach full capacity of 650,000 barrels per day by the end of the year.
The refinery has begun to deliver diesel and aviation fuel to the country’s marketers, as well as petrol.
The pump price of petrol at NNPCL outlets across the country has increased from roughly N600 to more than N900.
The millionaire businessman stated that as soon as his company finalizes protocols with the NNPCL, the product will enter the market. The NNPCL later announced that it would begin lifting fuel from Dangote Refinery in mid-September.
