Bamidele Famoofo
Energy industry experts and stakeholders have affirmed that the coming onstream of Port Harcourt, Warri and Dangote Petroleum Refineries is a game changer for the downstream sector of the Nigerian economy, as the development will promote healthy price competition, and offer fuel marketers and consumers multiple sources of petroleum products.
Nigerian energy industry stakeholders, at the weekend, noted there are strong indications, that the price of Premium Motor Spirit (PMS), also called petrol, may crash further to as low as N500/litre in 2025.
Industry experts who spoke on the emerging development projected that petrol, which currently sells for between N900 and N950, at several filling stations in Abuja, Lagos, and other major cities in the West African country, might further crash to N500 this year.
The oil stakeholders also disclosed that the possible drop in prices of petrol in 2025 is premised on a strong downstream sector propelled by the deregulation policy of the Federal Government.
Other obvious reasons for the price drop, according to industry players, include stable Foreign Exchange (Forex) policy, fuel price competition, Naira-for-crude policy, and the coming on stream of the Port Harcourt, Warri, and Dangote Petroleum Refineries in the economy.
They also affirmed that for the refineries to sell their petroleum products in the domestic market and accept payment in Naira would contribute to price reduction for the commodity.
It is recalled the Bola Ahmed Tinubu-led Federal Executive Council (FEC) in July 2024, had approved the sale of crude to local refineries, including Dangote’s, for payment in Naira.
Aside from these factors, the rebound of activities by other modular refineries, which are now upbeat about the downstream sector, have concluded plans to add petrol refining to their stable of products in addition to diesel which hitherto was their sole product line.
Nigeria’s daily petrol consumption and fuel importation
Nigeria’s current daily petrol consumption has hit approximately 40 million litres with local production, according to a report.
Truck out data from the Nigerian Midstream and Downstream Regulatory Authority (NMDPRA) also indicates the Dangote Petroleum Refinery contributes an average of seven million litres while Nigerian National Petroleum Company Limited (NNPCL) controls 1.2 million litres, totalling 8.2 million litres.
The West African country currently has about 25 licensed modular refineries but only five are in operation, the report noted.
By implication, only 20.5 per cent of Nigeria’s petrol needs are met through local refining, while the remaining 79.5 per cent or 31.8 million litres are imported.
It was also gathered that the Dangote Petroleum Refinery, currently, produces about 30 million litres of petrol, but only injects about seven million litres into the domestic market.
The figure, however, increased by five million litres up from its initial 25 million litres in October last year.
Kaduna, Port Harcourt Refinery 2 undergoing rehabilitation
On the contrary, the 125,000 barrels per day (bpd) Warri Refining and Petrochemicals Company (WRPC), which commenced operations a few days ago, is operating at 60 per cent capacity with the production of Kerosene, Diesel and Naphtha.
Before the commencement of operations of Warri Refinery, the 60,000 barrels per day Port Harcourt Refinery, which commenced operations over a month ago, injected about 1.4 million litres of petrol via blending with straight-run gasoline, 1.5 million litres of diesel and 2.1 million litres of LPFO.
Mele Kyari, Group Chief Executive Officer (GCEO) of NNPC Limited, was quoted to say that the 150,000 Port Harcourt Refinery 2 is currently undergoing rehabilitation and is at the 90 per cent completion stage, ditto for the Kaduna Refinery, which is also undergoing rehabilitation.
Though President Tinubu had directed the NNPCL to reactivate other state-owned oil refineries to further boost local production of petroleum products, a Presidency source disclosed that the Kaduna Refinery might not come on stream anytime soon, due to the huge cost implication and other technical reasons.
Despite increased local oil-refining efforts, major marketers and some private depot owners are still importing about 30 million litres daily to bridge the supply shortfall, according to a report.
Ukadike Chinedu, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), said the coming on stream of Port Harcourt and Warri refineries is “a game changer for the downstream sector” as it would promote a healthy price competition as already being witnessed in the country.
Ukadike also noted both the Nigerian National Petroleum Company Limited and Dangote Petroleum Refinery have reduced prices in the last three weeks, describing the moves as a signal of the gains of multiple sources of oil production in Nigeria.
Besides, he said the coming onstream of the NNPC Limited refineries in addition to
Dangote gives petroleum marketers and consumers the option of multiple sources of products as against a monopoly market, he stated.
Ukadike was upbeat that this development will see prices of petrol drop further below N500 per litre in 2025, as more players add capacity to refining petroleum products.
According to the IPMAN national publicity chief, the federal government’s Foreign Exchange policy is already yielding some positive results with a Dollar exchanging for less than N1,800.
If this trend is sustained, petroleum prices will crash further because more Foreign Exchange would be conserved when products are no longer imported, said Ukadike.
Billy Harry, President of the Petroleum Products Retail Owners Association of Nigeria (PETROAN), also aligned with Ukadike’s submissions in this regard.
Harry assured that the coming on stream of the Port Harcourt and Warri refineries would lead to cheaper fuel options for Nigerian energy consumers.
He equally maintained that the possibility of affordable petrol for consumers is very feasible in 2025.
The PETROAN President stated: “As you can see, NNPC has reduced its ex-depot price from N1, 045 per litre to N899 per litre for marketers, translating to N925 per litre at the pumps for the end users. “This, I must say, is very commendable. These are not small drops, but massive drops from N1, 045 to N899 ex-depot is a lot of drops.”
According to Harry, the Dangote Refinery also implemented a similar ex-depot price slash from N970 to N899.50 per litre.
In line with the consistent availability of petroleum products, competition will set in and prices of petroleum products will drop further in Nigeria in the New Year.
Speaking on the gains of deregulation of the downstream sector, Iche Idoko, publicity secretary of Crude Oil Refiners Association of Nigeria (CORAN), also agreed that Nigerian energy consumers would gradually begin to witness the gains, which is typical of a deregulated market.
Idoko said, “Price drop is one of the characteristics of deregulation we had highlighted.
“As the industry settles into the regime of full deregulation, we are bound to see competitions amongst players, which ultimately will benefit the consumers.”
According to him, these competitions will be around prices, product quality, and credit lines available to bulk buyers. These are the advantages that local refining brings, he stated.
Dangote drives competition harder
Recently, Ardova Plc and Heyden Petroleum entered into a bulk purchase agreement with the Dangote Petroleum Refinery. This initiative is designed to ensure a steady supply of petroleum products at affordable prices, further stabilising the nation’s fuel market and enhancing energy security for consumers.
The development follows in the footsteps of MRS Oil Nigeria Plc, which had previously entered into a similar agreement with Dangote Refinery.
As a result, MRS Oil recently lowered its fuel prices to N935 per litre across all its stations nationwide, addressing the long-standing issue of price disparities between states.
