The ongoing fuel scarcity has heightened demand for PMS production from the Dangote Refinery among industry stakeholders and consumers.
Experts suggest that output from the Dangote Refinery, expected to begin this month, could offer relief to consumers by addressing supply challenges.
However, opinions differ on how the refinery’s operations will influence PMS prices in the coming months.
The persistent fuel shortage has intensified calls for Premium Motor Spirit (PMS) production at the Dangote Refinery, the world’s largest single-train refinery, drawing focus from both industry stakeholders and consumers.
Despite repeated assurances from Nigerian National Petroleum Corporation (NNPC) Limited that distribution issues have been addressed, fuel scarcity and long queues continue in key areas like Lagos, Ogun, and Abuja.
Many petrol stations remain closed, forcing both commercial and private vehicles to queue at the few stations that are still open.
In Ikeja, Maryland, Ikorodu, and other parts of Lagos, petrol prices have surged to as high as N1,000 per litre, worsening the struggle for fuel.
This concerning trend is also visible in Ogun State and the nation’s capital, Abuja.
One frustrated driver told Nairametrics, “Paying N1,000 per litre now feels like the new normal amid this scarcity—if you’re fortunate enough to find any.”
The NNPC’s inability to resolve this ongoing crisis has further highlighted the urgent need for the Dangote Refinery to begin fuel production.
As former NERC Chairman Sam Amadi pointed out, “The core issue is supply. The hope is that once the Dangote Refinery is operational, it will finally address these supply shortages.”
NNPC’s Political Responses
While the national oil company, currently the sole importer of fuel in the country, has repeatedly stated that the fuel scarcity is due to distribution issues, many believe the explanations from NNPC lack clarity.
Marketers and petrol station operators who spoke with Nairametrics said the main issue they face is supply, adding that they cannot explain why this is happening.
Speaking with Nairametrics, Amadi remarked that NNPC is only providing a “political answer” rather than a technical one.
According to the energy expert, it is clear that whatever is causing this crisis has not been addressed by the national oil company.
“NNPC’s statements are not always reliable. They tend to focus on political messaging rather than technical solutions. It’s obvious that the root cause of the scarcity has not been resolved.
“It could be due to logistics issues in procuring and distributing the product or some form of artificial hoarding. NNPC isn’t really trustworthy,” Amadi said.
Diverse Opinions on Dangote Refinery’s September Launch
Moreover, stakeholders in the sector are now preparing for the anticipated September launch of petrol production from the Dangote Refinery, hoping it could be the much-needed solution to end the crisis of long queues and high petrol prices.
NewsDirecr previously reported that Dangote Refinery is aiming for a September start date following multiple delays caused by technical challenges and a lack of supply from both the NNPC and international oil companies (IOCs).
For many in the industry, Dangote Refinery is seen as the potential key to finally resolving the persistent fuel shortage crisis.
However, there are varied opinions on how Dangote will price his petrol amid market uncertainty and other influencing factors.
Senior partner at Bloomfield Law and energy expert Ayodele Oni expressed cautious optimism about the impact of the 650,000 barrels per day refinery on the price of PMS.
According to him, Dangote Refinery could resolve the logistics problems facing the petroleum industry today. He also observed that reducing the cost of importing PMS could translate into lower product prices, albeit considering other prevailing market realities.
“Refining within Nigeria could lead to some changes in fuel pricing. This is because the reduction in logistics costs, eliminating the need for large vessels to transport products, may help lower PMS prices.
“However, it’s important to note that a significant portion of PMS pricing is influenced by the international crude oil market,” Oni told NewsDirecr.
On his part, Amadi said that while the Dangote Refinery might address the supply issues causing fuel scarcity, he doesn’t think it will significantly reduce petrol prices in the coming months.
He said that the country could expect better pricing from Dangote, but this might also be counterbalanced by international market prices.
“If the Dangote Refinery begins production, it will increase supply. Generally, an increase in supply reduces prices, but the price difference we might see post-Dangote will depend on its own pricing.
“Dangote says it will sell at the international market price. This is logical since he has to remain competitive. So the price difference may be limited to the associated cost of imports. We could see better prices from Dangote depending on the import cost,” Amadi said.
Price Uncertainty for Petrol
Last month, amid speculation from marketers that the refinery may set its price at N600 per litre, the refinery’s management released a statement declaring that they have not set any price for their products.
The spokesperson of Dangote Group, Anthony Chiejina, clarified that the speculation from marketers does not reflect the refinery’s position.
“Our attention has been drawn to headlines announcing ‘Marketers Project N600/litre for Dangote Petrol,’ published in Punch Newspapers on Tuesday, August 13, 2024.
“We want to clarify that the Independent Petroleum Marketers Association of Nigeria (IPMAN) is not our business partner yet.
“We have never discussed the price of Premium Motor Spirit (PMS) with them, and they do not have the authority to speak for us, either officially or unofficially.
“We urge the public to ignore such speculative announcements. We have our official channels through which we communicate our views to our stakeholders,” Chiejina said.
Meanwhile, industry experts anticipate that Dangote will likely set its petrol price upon commencing distribution this month, following a similar approach to announcing the diesel price.
