Tinubu Panel, Dangote Refinery Collaborate on Petrol Pricing Strategy
Recent discussions suggest that the Federal Government’s committee, established to oversee the implementation of crude oil sales to local refineries in naira, will soon address the pricing of Premium Motor Spirit (PMS), commonly known as petrol, produced by the Dangote Petroleum Refinery. This upcoming deliberation is expected to occur within the next few weeks.
Officials from both the oil marketing sector and the Implementation Committee, led by Minister of Finance and Coordinating Minister of the Economy, Wale Edun, have confirmed that the committee will be conducting a series of meetings to finalize a pricing framework for petrol from the Dangote refinery.
This framework will establish a benchmark for how much the Dangote refinery will pay for crude oil in naira and whether the government will subsidize petrol prices or allow them to reflect market rates.
Oil marketers have expressed concerns that the cost of petrol from the Dangote refinery might exceed current pump prices, which range between N600 and N700 per litre. They argue that without government intervention, it may be difficult for dealers to purchase petrol at these elevated prices.
Currently, the Nigerian National Petroleum Company Limited (NNPC) is the sole importer of petrol into Nigeria and absorbs the cost disparity between the landing price and retail price through a subsidy arrangement. NNPC’s Chief Financial Officer, Umar Ajiya, recently revealed that the company has been covering substantial subsidy costs, with a significant shortfall of around N7.8 trillion in just the first seven months of this year.
As the Dangote refinery is set to begin operations in September, discussions are underway to determine whether the government will subsidize petrol prices or allow them to align with international market rates.
