The Publicity Secretary of the Crude Oil Refiners Association of Nigeria(CORAN), Eche Idoko, said that the association still has a strong belief that local refineries like Dangote and others can bring down the cost of petrol.
Idoko said the N898/litre claimed by the Nigerian National Petroleum Company Limited as the price it bought petrol from Dangote reflected the rising exchange rate noting that the N898 would drop to N550 if the exchange rate is pegged at N1,000/$ for locally-produced petroleum products.
He said that the PMS being sold by the Dangote refinery since last week was produced from imported crude and the ones bought locally in dollars.
“If you remember, we did say that if we begin to refine locally and there is a naira sale, the price of PMS will drop. We still stand strongly by that position. This particular batch of product that is being sold by Dangote, the crude was purchased in June at the international price.
“NNPC supplied 60 percent of that crude and the remaining percentage was imported by Dangote at the international price. Now, when they refine that product, they have to sell at the international price because they are a business, they have to make money.
“Even at N898, Idoko emphasised that the NNPC is buying at 300 below the usual landing cost of almost N1,200/litre.
“The pricing that you are seeing now is a reflection of what the international price is, less the cost of freighting. If you look at it now, NNPC was buying the product at N300 less; they’re paying N300 more for the product they were importing than what they are buying from Dangote at N889.
“That N300/litre was what I had mentioned before that local refining would take care of, even without any intervention,” he noted.
The CORAN spokesman added that the naira crude sale would automatically free up about 40 per cent of the nation’s foreign exchange which he said had gone into servicing the importation of petroleum products.
“If the financial sector is sincere, we should see an immediate climb by the naira against the dollar. And if the naira climbs against the dollar, without even the government pegging the price of the exchange rate for dollars in the pricing of that group, we will see a reduction in the price automatically,” he stated.
Idoko advised the Federal Government committee working on crude sales to local refineries to sell the feedstock in naira at a discount and peg the exchange rate at about N1,000 to a dollar.
“But because we are not completely in touch with what happens in the financial sector, we have said to the government – two things you will do. You will sell in naira at a discount, and then at that discount, you will peg the price at a particular exchange rate to the dollar.
“For instance, you can say, you are using N1,000 as an exchange rate for this dollar deal, for the locally refined petroleum products. And like that, you will see a significant drop in the price.
“So, whatever is happening now is outside whatever is being discussed by the government. And there is a whole lot of politics here and there. Some people are afraid that this would make Dangote become a monopoly.
“Dangote now is a member of our association and will play by the rules of our association. We would also control the chances of monopoly to start with. Then the NMDPRA is there as a major gatekeeper to control any form of monopoly.
“There are two more things I will say, rather than see what is happening as a minus, NNPC should be thanking the local players for coming in to rescue them. The NNPC should see Dangote and the other private players that have come in as a partner and work with them to solve this issue. Let us all work together and not try to gaslight the public against the other person,” he said.
