Updated: FG May Pay Subsidy on Dangote Petrol as Marketers Speculate Price, NNPC Ready to Lift
- There are indications that the Nigerian government may pay a subsidy on petrol from the Dangote Refinery
- The refinery has set mid-September to release the product into the Nigerian market
- Marketers are already speculating that they may not be able to afford petrol from the refinery, needing the government to offset the cost in the form of a subsidy
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
After several postponements due to crude supply challenges, the Dangote Refinery has set a timeline for releasing petrol into the Nigerian market.
The development follows a series of meetings with the Nigerian government after the government mandated the country’s industry regulators to begin the sale of crude to local refineries in naira.
Source: UGC
Dangote may sell petrol above the pump price
However, there are indications that the Nigerian government may subsidise petrol from the refinery, as the Nigerian National Petroleum Company Limited (NNPCL) has pegged the landing cost at N1,200 per litre.
A committee set up by the Nigerian government is already intensely negotiating crude oil sales to the $19 billion refinery and others in the local currency, beginning October 1, 2024.
However, sources have disclosed that the Nigerian government is contemplating subsidy on petrol from the refinery, although it is still being determined how much PMS from the facility will cost.
The sources said the government believes Dangote will sell petrol above the pump price due to high production costs.
Punch reports that officials among oil marketers and implementation committee members on crude oil sales in naira stated that the panel would hold meetings on petrol pricing from Africa's largest refinery in the coming days and weeks.
FG to decide to pay subsidy on Dangote petrol
They also reportedly said that the committee would conclude a framework benchmarking the amount the refinery would pay for crude in naira. The Nigerian government would decide whether to pay subsidies for petrol from the facility to allow Nigerians to buy the product at the market price.
Oil marketers fear that the cost of petrol from the 650,000 bpd-capacity refinery would be more than the current prices sold at the pumps.
They disclosed that it would be difficult to afford petrol above the NNPC-regulated price.
Petrol currently sells between N600 and N700 per litre, depending on the area of purchase across Nigeria.
Petrol landing cost hits N1,117 per litre
Major marketers said that petrol's landing cost is about N1,117 per litre, which the Nigerian government subsidises.
Marketers disclosed that this is the actual price of the commodity and explained that the cost of petrol from the Dangote Refinery should be around that range.
Dangote Refinery test runs petrol production
Legit.ng earlier reported that Dangote Refinery was conducting petrol test runs in anticipation of scheduled petrol production in September.
The facility was expected to release petrol into the Nigerian market in September after delays and deadline misses, which it blamed on crude oil supply challenges.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng.
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