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Why Dangote refinery will not reduce price of petrol – Ministers

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Dangote makes 60 new artisans millionaires in one month
Alhaji Aliko Dangote

By Prince Okafor

Ahead of  Dangote Refinery’s  takeoff next year, a fresh revelation has emerged that the project will not reduce the cost of Premium Motor Spirit, PMS, popularly known as petrol.

Making this revelation during NTA’s ‘Good Morning Nigeria’ programme yesterday, the Minister of Finance, Budget and National Planning, Zainab Ahmed, explained that it will have less significance on the price of petrol in Nigeria because the refinery will be selling at international price.

She said:  “What we are doing is enabling the petroleum sector to actually grow. There have been a number of refineries that have been licensed for several years. None of them was willing to start refining under the regime that we had, where fuel price was controlled.

“The Dangote refinery is sitting within an Export Processing Zone in Lagos, so they are insulated from that. When we buy fuel from Dangote, we will be buying fuel at the international market price.

‘’The only savings that we will be making is the savings of freight which is shipping. We will not be paying for shipping cost.

“But we will still have landing cost, labour cost, and the marketers will still have to put a margin. The refineries that are supposed to have come into operation can now come in because they are assured that when they produce, they can sell at market rate and recover their investments and make some reasonable profits.”

READ ALSO: Deregulation: NNPC to setup CNG refilling plants across country

Zainab explained that the deregulation of the downstream sector, which led to an increase in petrol price, was good for the economy as it would encourage investments in refineries. In her word: “It will mean more refineries will open, they will employ people and fuel will be available in different parts of the country and not just relying on government refineries.

“The government refineries are old and even if we turn them around, we will not be able to operate them at optimal capacity, so while the NNPC is trying to rehabilitate them, we also need to encourage the private sector refineries to come on stream and even state governments that have the capacity.”

Also speaking, the Minister of State for Petroleum Resources, Timipre Sylva, stated that the major determinant of the cost of petrol was crude oil, adding that as long as it remained high, the cost of petrol will not drop.

The minister said:  “For now, our supply is coming mostly from imports as we all know. And that doesn’t really have an impact on the price as people would think. The only difference that will happen if our supply was coming from in-country would have been the freight price.

“But whether it is coming from outside or coming from within, it will be about the same cost because when you import, the only difference is that you will have to pay the freight.  ‘’But it is the same cost of crude and whether you are refining or not, you will have to pay the market price for the crude.”

Vanguard

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