An oil industry player and Chief Executive Officer of CITA, Dr. Thomas Ogungbangbe, has said roll out of petroleum products from Dangote Refinery would not bring about any price reduction but product availability.
He said with the present global price of fuel, only the government can buy Dangote fuel.
In a chat with our correspondent, Ogungbangbe said, “Like I said, Dangote would only ensure availability, it does not translate to any magical price reduction because Dangote refinery is a for-profit-venture and it is also logging to the protocols of other refineries in the world.”
He spoke with our correspondent against the backdrop of the roll out of premium motor spirit (PMS) otherwise known as petroleum from Dangote refinery with the NNPCL loading the product.
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Ogungbangbe said only a full deregulation would liberalise the market, make more operators come in and probably crash the price with competition setting in.
He said, “What can happen if there is deregulation and subsidy is removed is that a litre of petrol will sell for as much as a dollar. So what it means is that the original price of petrol anywhere in the world, you can check the dashboard in the US or UK, it is also between 80 cent and one dollar anywhere in the world.
“So as it is now with the present increment, Nigeria is still ranking as one of the cheapest in the world, which means the government is still paying a lot to subsidise. So if the subsidy is removed, I can tell you that there is nothing that would make petrol to sell less than N1,500 a litre.
“If Dangote is going to sell a litre of petrol, he would most probably sell for maybe N1,200, N1,300 or N1,400 to be able to make his money back.
“Can people buy it? So the government is just using NNPC to come in the middle of arbitrage. So the government is just trying to save the pocket of the people by taking some of the heat. So that is the reason why it is only NNPC that can buy PMS from Dangote because any other purchase or purchases would only be for exports.
“There is nobody that can go to Dangote and buy PMS at the price they would sell it and make profit because you can’t buy something for N1,200 or N1,300 and sell it for N800.”
He added, “Even as it is, the government is giving almost 50 per cent subsidy on PMS even at the present increment, the government is still taking heat. So it is only the government that can buy it, there is no other company that can buy it and make profit.
“My advice for the government is to remove the subsidy completely because there is no way the government can survive at the going rate.”
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