If there’s one burning question on the minds of Nigerians these days, it’s this: why are we paying between N1,000 and N1,500 for a litre of Premium Motor Spirit (PMS)?
Sadly, the very people who should be explaining this strange new reality have decided to stay tight-lipped with heads buried in the sand like ostriches. Meanwhile, those who have been milking the country’s oil wealth while keeping its four refineries comatose – have been busy peddling a lot of dubious narratives to discredit Dangote Petroleum Refinery. Apparently, some people would rather pull the wool over our eyes than let us see the real picture.
Let’s get one thing straight: the Dangote Refinery is not to blame for the price of PMS in Nigeria. In fact, without this refinery, we might be staring at petrol prices as high as N2,500 a litre – just like the recent strident gloomy predictions from oil marketers and analysts.
The real culprits in this price mess are the oil cabals and their cosy friends at the Nigerian National Petroleum Corporation Limited (NNPCL). These folks are busy trying to spin the tale that locally refined products are somehow more expensive than imported fuel, which, in their view, justifies the ongoing need to import fuel and keep those highly subsidised prices intact. Let’s pause for a moment and ask: since when did importing fuel become a better deal than refining it locally? That’s like paying extra for a loaf of bread because someone else baked it in their oven… miles away.
As with all global refineries, the Dangote Petroleum Refinery doesn’t set pump prices for petroleum products. Those decisions, much to the chagrin of the refinery’s critics, are based on market dynamics, government policies, and, the influence of some very powerful individuals. The real reason for the recent hike in petrol prices is a simple equation: subsidy removal plus the floating of the Naira.
As recently as August, reports showed that the NNPCL was selling petrol at half the actual cost of imported fuel. Officially, the pump price was N568 per litre, but the true landing cost was a shocking N1,100 per litre. So, the NNPC was generously “subsidising” fuel imports by almost N600 per litre – subsidising, that is, until the entire scheme became too expensive to sustain. So, naturally, prices were hiked to N855 per litre.
And here’s the kicker: the Federal Government racked up an eye-watering N5.1 trillion in under-recovery and energy security expenses on fuel imports in 2023. Guess where that money came from? The same pockets that should have been filled with healthcare, education, and infrastructure funds. Instead, we were left with an empty wallet and a bill that was too big to ignore.
Meanwhile, on the other side of the world, Guyana – the third-smallest sovereign state in the world, is generously handing out $100,000 cash grants to its adult citizens as part of its oil boom, while Nigeria – the most populous black nation on Earth – is amassing foreign debt to pay for fuel subsidies.
If the pricing template used to offset imported petrol costs was applied to products from Dangote Refinery, the price of petrol could be much lower than what we’re seeing today – possibly as low as N500 per litre. That’s right, N500. But of course, the government, apparently has decided not to restore the subsidies. After all, what was once intended as relief for the people has now turned into a siphoning operation.
According to a report by The Guardian Newspapers in October, oil marketers are making an extra 48% profit by smuggling petrol out of Nigeria to neighbouring countries, where the price is far higher. In Mali, the price is N2,266 per litre, in Cote d’Ivoire it’s N2,289, in Cameroon N2,196, and in Benin Republic N1,779. No surprises there, then, that daily PMS consumption in Nigeria keeps rising. And if the oil cabals get their way, we’ll be looking at a whopping 103 million litres per day – just like we saw in 2022.
The government is, understandably, trying to keep local prices aligned with those in neighbouring countries to curb smuggling. But honestly, until the greedy cabals are shown the red card and we finally declare that “business as usual” is over, the government strategy is dead on arrival.
While President Bola Ahmed Tinubu’s Naira-for-Crude initiative is certainly a step in the right direction, the floating of the Naira is still keeping petrol prices stubbornly high. Why? Crude oil is priced in dollars, so domestic refiners, including the Dangote Refinery, are still paying the exact dollar amount for crude, but now in Naira. And when you convert dollar to Naira, it’s expensive. For instance, a mere $90 per barrel now translates to over N150,000.
Currently, a litre of Nigerian crude costs between N890 and N910, before factoring in refining and logistics costs. So, what’s the magic number? How much can a refinery – domestic or foreign – realistically sell a litre of refined petrol for? That’s the million-naira question!
With the Naira-for-Crude policy, the expectation is that the Naira will stabilise over time. If that happens, petrol prices should eventually fall. Imagine, if the Naira strengthens to N1,000 to the dollar – the price of petrol could drop significantly. That’s what every genuine, patriotic Nigerian should be rooting for – not chasing after mythical dollars that only serve to put more pressure on the Naira.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, proudly stated that the government would earn about N700 billion monthly from the sale of crude in Naira and from the subsidy removal policies, compared to the $600 million it was previously spending on fuel imports. So, let’s do the math: one option helps the people, the other helps the oil cartels. No prizes for guessing which one benefits Nigeria in the long run.
Of course, the oil cabals won’t see the benefits because it will take away their free access to wealth, allowing them to continue living their best lives. Isn’t it funny that these same marketers who have been crying about petrol prices because of a lack of local refining capacity are now saying it’s cheaper to import fuel than to refine it here? Where were they when the government was doling out trillions for the turnaround maintenance of refineries? Suddenly, the landing cost of imports, which was as high as N1,400 per litre, has magically dropped to under N1,000. How convenient!
It’s clear that the cartels have been blending off-spec fuel while collecting subsidies for “premium” products. Or perhaps they’ve been stealing crude and blending it abroad – after all, crude theft in Nigeria is a well-known business, especially when it’s done using large vessels under the radar.
Already, Nigerians are seeing the benefits of the Dangote Petroleum Refinery in reducing the prices of other petroleum products like diesel and aviation fuel by over 45% and 35% respectively. Naturally, this earned Dangote a fair bit of flak from the oil cabals, who promptly wrote to President Tinubu, complaining that this “patriotic man” was ruining their business by actually alleviating the suffering of the people. Whoever knew that doing something good for the public could be so controversial?
Nevertheless, we’re confident that a similar reduction in PMS prices will follow once local refining capacity is fully embraced and stakeholders start putting Nigeria’s interests ahead of their own pockets. After all, if it works for diesel and aviation fuel, surely it’s not too much to ask that petrol prices follow suit – unless, of course, the oil cartels have a different agenda.
The Dangote Petroleum Refinery has chosen to rise above the noise, urging all stakeholders to put the nation’s progress and the welfare of its people above personal gains. Unfortunately, some prefer to keep spreading falsehoods about a private investment that is designed to propel Nigeria towards economic self-sufficiency.
For those still sceptical, I’ll say this: the Aliko Dangote I know is not the type to bow to propaganda, hate, or lies – especially when it’s all in defence of Nigeria’s national interest and the development of Africa.
•Abiodun writes from Lagos
