The Federal Government’s committee, established to facilitate the sale of crude oil to local refineries in naira, is set to finalize discussions on the pricing of petrol from the Dangote Petroleum Refinery, scheduled to be released next month. The committee, led by Finance Minister Wale Edun, will focus on setting a benchmark price for the crude oil that Dangote will purchase in naira.
Oil marketers have raised concerns that petrol from the Dangote refinery could be priced higher than current pump prices, with the actual market price potentially around ₦1,117 per liter. The current retail price of petrol in Nigeria ranges from ₦600 to ₦700 per liter, while the landing cost stands at approximately ₦1,200 per liter.
The Nigerian National Petroleum Company Limited (NNPCL) has been shouldering a significant subsidy burden, with its Chief Financial Officer, Umar Ajiya, revealing that the company has been selling petrol at about half the landing cost under government directives, covering a shortfall of ₦7.8 trillion in the first seven months of this year.
As the government contemplates whether to reintroduce petrol subsidies or allow market-driven prices, it is clear that without intervention, the cost of petrol from the Dangote refinery could be beyond the reach of many Nigerians. The final decision is expected in the coming weeks, with the sale of crude to Dangote in naira already agreed upon and scheduled to commence on October 1, 2024.
Marketers and government officials acknowledge that the only viable solutions are either reintroducing subsidies or allowing Nigerians to bear the full cost of petrol, though both options carry significant economic implications. The ongoing discussions are expected to clarify the government’s approach and the future of petrol pricing in Nigeria.
