Expert Explains Why Dangote Cannot Crash Fuel Price, Speaks on Monopoly of Refinery
- The oil and gas regulatory authority has been asked by experts in the oil and gas industry to withstand pressure
- The experts said this after the NMDPRA chief accused Dangote refinery of wanting a monopoly in the sector
- Henry Adigun, an energy consultant, critisied the NMDPRA for voicing opposition to the Dangote refinery in public
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
An expert in the oil and gas industry have asked the Nigerian Midstream and Downstream Petroleum Regulatory Authority to resist pressure, arguing that the country was not ready to stop importing refined petroleum products.
Source: Getty Images
This came after the NMDPRA Chief Executive, Farouk Ahmed, made accusations that the Dangote refinery wanted him to stop granting licenses for petrol imports, which prompted the experts to make this statement.
According to Ahmed, he turned down the request to prevent monopolies and guarantee national energy security.
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Nigerians became displeased by the regulator's remark, and several demanded that he be fired.
How analyst reacted
Energy consultant Henry Adigun criticised the NMDPRA for making public remarks against the Dangote refinery in an interview with The Punch.
He believed that while most of what Ahmed had stated was genuine, it was intended to remain confidential.
Adigun believes that Nigeria shouldn't cease importing fuel until the nation has three or four refineries operating.
“We cannot stop the importation of fuel now until we have about three to four functioning refineries. We cannot have our energy security in the hands of one person, that’s what the NMDPRA chief executive was trying to say, but it shouldn’t have been a discussion for the press,” Adigun stated.
He went on to say that other investors who might be impacted by the abrupt halt of imports should also be taken into account by the government.
The expert pointed out that depot owners' rights to import petroleum were safeguarded by the Petroleum Industry Act and that a fiat could not take those rights away.
Dangote cannot crash fuel price
Adigun claims that those who currently import fuel inevitably choose to use the Dangote refinery because the cost is less expensive than importing petrol from outside the nation.
Adigun insisted that it was improbable that the Dangote refinery would cause the pump price to collapse, despite rumours to the contrary.
He maintained that the price of crude will be set by the global standard regardless of whether it was delivered locally or in naira.
He said that the current landing cost of gasoline is approximately N1,100, a factor heavily influenced by production costs.
However, according to Adigun, that is only possible if Dangote and the Nigerian National Petroleum Company Limited establish a contract that requires them to sell at a set price without relying on the global benchmark or the volatile foreign exchange rate.
NNPC declares state of emergency
Legit.ng earlier reported that the Nigerian National Petroleum Company Limited (NNPC Ltd) declared a state of emergency on crude oil production.
Speaking at the ongoing 2024 Nigeria Oil and Gas (NOG) Energy Week in Abuja on Tuesday, June 2, NNPC Ltd's group chief executive officer, Mele Kyari, declared a decisive move to address forces and challenges hindering crude oil production in the country.
According to the NNPC Limited boss, Nigeria can conveniently produce two million barrels of crude oil daily without deploying new rigs.
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Source: Legit.ng
