Economy | Oil & Gas

FG: Dangote Refinery Will Sell Petrol at International Price

Sep 15, 2020   •   by   •   Source: Proshare   •   eye-icon 1321 views

Tuesday, September 15, 2020 / 11:28 PM / ByEniola Akinkuotu  of Punch Newspaper / Header Image Credit: Global Trade Review


The Minister of Finance, Budget and National Planning,Zainab Ahmed, has said when Dangote Refinery kicks off next year, it may notsignificantly reduce the price of petrol because the refinery will be sellingat the international price.


Ahmed said this is because the refinery is located atthe Export Processing Zone in Lagos State.


The minister said this on NTA's 'Good Morning Nigeria' programme on Monday, which was monitored by our correspondent.


She said the only thing Nigeria would not need to payis shipping cost.


Zainab said, "What we are doing is enabling thepetroleum sector to actually grow. There have been a number of refineries thathave been licensed for several years. None of them was willing to startrefining under the regime that we had were fuel was controlled.


"The Dangote refinery is sitting within an ExportProcessing Zone so they are insulated from that. When we buy fuel from Dangote,we will be buying fuel at the international market price. The only savings thatwe will be making is the savings of freight which is shipping.


"But we will still have landing cost; labour cost andthe marketers will still have to put a margin. These refineries being thosethat are supposed to have come to operate can now come in because they areassured that when they produce, they can sell at market rate and recover theirinvestments and make some reasonable profits".


She said the deregulation of the sector which led tothe increase in petrol price was good for the economy as it would encourageinvestments in refineries.


Ahmed added, "It will mean more refineries will open,they will employ people and fuel will be available in different parts of thecountry and not just relying on the government refineries.


"Those refineries are old and even if we turn themaround, we will not be able to operate them at optimal capacity, so while theNNPC is trying to rehabilitate them, we also need to encourage the privatesector refineries to come on stream and even state governments that have thecapacity".


Also speaking, the Minister of State for Petroleum Resources,Timipre Sylva, said the pump price of petrol would not drop significantly evenif Nigeria is refining crude oil locally.


He said the major determinant of the cost of petrolwas crude oil and as long as it remains high, the cost of petrol will not drop.


Sylva said the only thing that could make localproduction cheaper is that there would not be a need to pay for shipping cost.


He said the cost of labour would not be too differentfrom the international price because local refineries would be payingexpatriates.


The minister added, "For now, our supply is comingmostly from imports as we all know. And that doesn't really have an impact onthe price as people would think. The only difference that will happen if oursupply was coming from in-country would have been the freight price. Butwhether it is coming from outside or coming from within, it will be about thesame cost because when you import, the only difference is that you will have topay the freight. But it is the same cost of crude and whether you are refiningor not, you will have to pay the market price for the crude".


The Dangote refinery is expected to commenceoperations next year with a capacity of refining 650,000 barrels of crude oilper day.



The post DangoteRefinery Will Sell Petrol at International Price, Says FG first appeared in Punch on September 14, 2020.


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