Oil and gas expert Henry Adigun has cited production costs denominated in US dollars as one reason the $20bn Dangote Refinery in Lagos might not sell a litre of Premium Motor Spirit (PMS), known as petrol, below the new pump price at the retail outlets of the Nigerian National Petroleum Company Limited (NNPCL).
Adigun was a guest on Inside Sources with Laolu Akande, a socio-political programme aired on Channels Television on Friday.
He said the petrol type produced at the Dangote Refinery is the best in the world, and the better the quality, the more the pricing.
The expert said fuel is a dollar-denominated business and refinery owner and billionaire businessman Aliko Dangote should be able to decide the price of petrol produced 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 nation, faces energy challenges, with all its state-owned refineries non-operational. The country is heavily reliant on imported refined petroleum products, with the state-run NNPCL being the major importer of the essential commodities.
Fuel queues are commonplace in the country. Prices of petrol tripled since the removal of subsidy in May 2023, from around ₦200/litre to about ₦800/litre, compounding the woes of the citizens who power their vehicles, and generating sets with petrol, no thanks to decades-long epileptic electricity supply.
Last December, Dangote, Africa’s leading industrialist, commenced operations at his $20bn facility sited in Lagos with 350,000 barrels a day.
The refinery, which was initially bogged by regulatory battles, hopes to achieve its full capacity of 650,000 barrels per day by the end of the year.
The refinery has begun the supply of diesel and aviation fuel to marketers in the country and now petrol.
At NNPCL outlets nationwide, the pump price of petrol was raised from around N600 to over N900.
The billionaire businessman said as soon as his company finalises modalities with the NNPCL, the product will hit the market. The NNPCL subsequently said it would start lifting fuel from Dangote Refinery in mid-September.
