Fakoyejo OlalekanDangote Refinery, Port Harcourt Refining Company and other refineries expected to come onstream in Nigeria will not reduce fuel prices in the country.
This is according to the Group Chief Executive Officer of Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, during an interview with Arise TV on Thursday.
Join our WhatsApp ChannelKyari said there have been claims that once Dangote Refinery and others begin production and distribution of fuel, the pump price will drop.
He explained that these refineries will also factor in the cost of production and other activities expenses, which will result in the price of fuel hovering around the current cost of petrol.
Recall that on Wednesday, the NNPC increased pump price from N189 per litre to N500 and above, depending on states, after President Bola Tinubu announced that there’s no longer subsidy.
Kyari said the government will not subsidise fuel as there are no funds to do that, and even when crude oil is refined locally the price of fuel will still be high.
“There is a notion that if the product is processed locally, prices will reduce. Let me make it clear that it is not going to change anything. If you produce locally, the refineries will also input the cost of production and other things and it will be sold at the current price.
“There will also be no subsidy when local production starts because there is no cash-to-back subsidy, this country no longer has the resources to continue with subsidy,” Kyari stated.
He revealed that the rehabilitation of Port Harcourt Refinery will be completed by the end of 2023. Kyari said it will boost fuel production levels in the country alongside that of Dangote.
How fuel prices will drop in Nigeria?
Kyari had previously disclosed that once NNPC is no longer the sole importer of fuel and more Nigerian companies participate in the importation, the fuel price will dwindle, as there will be competitive prices.
“The beauty of this (subsidy removal) is that there will be new entrants into the market because oil marketing companies’ reluctance to come into the market all along is the very fact of the subsidy regime that is in place.
“And that subsidy regime doesn’t have a guarantee of repayment back to those who provide the product at subsidise price and now that the market is being regulated, oil marketing companies can actually import product or even if it is produced locally, they can buy and take it into the market and sell it at its retail price.
“Therefore, you will see competition, even with NNPC. And by the way, by law, NNPC cannot do more than 30 percent of the market going forward. As soon as the market stabilises, oil marketing companies are able to come in.
“Competition will definitely come in and the market will regulate the prices itself. Therefore, this is just an instantaneous price and within a week or two, you will continue to see different prices because of different approaches from major players, companies have different approaches to it and competition will guide that. Ultimately, you’d see changes downwards and it is very likely because efficiency will come in.
“As soon as competition comes in, people will become more efficient in their depots, in managing their trucks, and in managing their fuel stations so that people can come to their stations. And it is showing already, right now, you will see motorists going to stations where they can have price differences.
“So this will regulate the market and on its own, the price will come down naturally. I don’t see any doubt about this,” Kyari explains.
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