The Federal Government’s committee, established to oversee the sale of crude oil to local refineries in naira, will soon deliberate on the pricing of Premium Motor Spirit (PMS) to be produced by the Dangote Petroleum Refinery, set to begin operations next month. Multiple sources within the oil sector and the Implementation Committee, led by Finance Minister Wale Edun, have confirmed that a series of meetings will be held over the coming weeks to finalize the pricing framework for the Dangote refinery’s output.
The committee is tasked with establishing a benchmark price for crude oil in naira and deciding whether to subsidize the price of petrol from the Dangote refinery or allow it to be sold at market rates. Currently, petrol prices range between ₦600 and ₦700 per litre across Nigeria, while the landing cost of PMS is approximately ₦1,117 per litre, according to the Major Energies Marketers Association of Nigeria.
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NNPC, the sole importer of petrol, has been covering a significant subsidy burden, with Chief Financial Officer Umar Ajiya revealing that the company has not paid any subsidy to marketers in nearly a decade. NNPC has been selling petrol at about half the landing cost, with the government covering the price shortfall. The official pump price is around ₦600 per litre, while the landing cost is about ₦1,200 per litre. NNPC has covered a shortfall of ₦7.8 trillion in the first seven months of the year.
The upcoming discussions will also address whether the government should subsidize the petrol from Dangote’s refinery or allow it to be sold at higher, market-driven prices. Oil marketers have expressed concerns that the price from Dangote’s plant could exceed current pump prices, potentially making it difficult for dealers to afford the product without government intervention.
The government’s decision will also impact the broader strategy for handling petrol subsidies, with some suggesting that the Compressed Natural Gas (CNG) initiative could offer an alternative solution. Despite these challenges, the committee is expected to finalize its recommendations soon, aiming to resolve the complex issues surrounding crude oil pricing and refining in Nigeria.
Madukwe B. Nwabuisi is an accomplished journalist renown for his fearless reporting style and extensive expertise in the field. He is an investigative journalist, who has established himself as a kamikaze reporter.
