The much-anticipated commencement of Premium Motor Spirit (PMS) supply from the Dangote Refinery in Nigeria has been met with skepticism from industry experts and marketers, who do not foresee a significant price reduction in the market.
The refinery, owned by Africa's richest man, Aliko Dangote, has shifted its projected start date for fuel supply to mid-July 2024, citing "a little bit of delay."
Despite the refinery's earlier commencement of diesel and aviation fuel supply in April, it has struggled to secure sufficient crude oil for its petrol production.
Dangote has accused international oil companies (IOCs) in Nigeria of sabotaging the refinery's efforts by refusing to sell crude oil at a reasonable price.
The IOCs have been selling crude oil at a premium price $6 higher than the market price, forcing Dangote to look to the US for crude oil imports.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has assured that it will ensure IOCs supply crude oil to Dangote Refinery.
However, the refinery continues to face challenges in securing adequate crude oil supply. The Lagos Chamber of Commerce and Industry has blamed oil theft and vandalization of pipelines for the inadequate supply of crude oil to Dangote by IOCs.
The President of Petroleum Products Retail Outlets Owners Association (PETROAN), Billy Gillis-Harry, believes that the entrance of Dangote Refinery's fuel into the Nigerian market is unlikely to lead to a price crash.
He points out that despite the refinery's announcement of a price cut for diesel, Nigerians ended up paying a higher price for the product. Gillis-Harry argues that as long as Dangote Refinery exports crude oil into Nigeria, the cost of its fuel will remain high.
The high energy cost in Nigeria is stifling the country's economy, according to Barr. Ameh Madaki, Managing Partner of BBH Consulting and Convener of Public Interest Advocacy Network (PIAN).
He is urging the Dangote Refinery to proceed with reducing the prices of petroleum products, arguing that the current price range of N800 to N1,000 is excessive and is suffocating the economy.
Wumi Iledare, Professor Emeritus and Executive Director of Emmanuel Egbogah Foundation, blames decision makers for the challenges facing the oil and gas sector in Nigeria.
He argues that the understanding of the complexity of the sector is very limited among decision makers, leading to a lack of policy consistency and chaos in the sector.
As the debate on the challenges facing Dangote Refinery continues, Nigerians are left wondering about the future of fuel prices in the country.
With the removal of fuel subsidy last year, petrol prices have increased to an average of N769.62 per liter in May 2024 from N238 in the same period the previous year.
This development, along with other policies by President Bola Ahmed Tinubu's government, has pushed Nigeria's headline and food inflation to 33.95 percent and 40.66 percent, respectively.
The outcome has led to a decrease in Nigerians' purchasing power and an increase in the misery index.
