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What exactly will be the price is to be awaited and worked out because variables are involved, yet there are hopes that it would affect positively.
The expectation that Dangote fuel would bring down the pump price of fuel is on the street.
Experts analysis revolves around the fact that the cost of refined products would drop marginally, but noted that it would be tough to give a specific amount now.
YOUNEWS understand that the prices of diesel and aviation fuel are fully deregulated commodities, unlike that of Premium Motor Spirit, popularly called petrol, which has been a subject of debate on whether it is being subsidised or not.
Meanwhile, the major marketers CEO further explained that the cost of crude oil would play a major role in determining the cost of fuel from Dangote refinery.
He said, “We expect the price of products to be what is called market price. Remember he has built the refinery at $19bn. He has to refund his loan. He has to pay his contractors. He has to pay the owners of capital.
“I believe he will sell the product at a price that will enable him to recover his costs, both capital and operational costs, and then make a profit. I don’t expect the price to be much different from the market price today.
“You know that crude oil is also priced in dollars, so what’s the difference? The price of crude oil is the same internationally, even if you buy locally. Why will you buy below the cost, unless you want to go back to subsidising.
Crude oil is very expensive to produce. A lot of that oil is offshore.
“I’ve heard some people say there will be savings in freight, that might be true. But that is a very small part of the cost. The major part of the cost is the raw material, which is the crude oil; even the refining cost is quite small. I don’t expect a significant drop in price, definitely not N400, that’s very unlikely, in my opinion.
Already, the MOMAN, ( Major Oil Marketers Association of Nigeria )CEO expressed excitement about the coming onstream of the refinery but stated that he could not tell what the pricing policy of the refinery would be.
“It should be the market price because you need to recover your cost, and capital, and repay your loans. I don’t know what the market price will be, but I know that with my international experience in the economics of petroleum, nobody does this business to make a loss,” he stated.
On how much reduction in the cost of diesel and aviation fuel should Nigerians expect once the products start hitting a market said, “It is difficult to give an exact figure because so many variables are at play.
“However, the fact that the crude oil that is being used is the one for domestic consumption, takes away the cost of freight and insurance from the total cost. So if that has been removed, there is a likelihood that prices will be impacted positively to the benefit of Nigerians.
“But what exactly will be the price is to be awaited and worked out because, for instance, we don’t know how much he received the crude oil, whether it is in naira or dollar, and those are business information that sometimes is difficult to release.
“However, regardless of whatever the situation is, we should still expect a reprieve, some advantages should come to us. So that is my thinking.”
The Dangote Petroleum Refinery and Petrochemical Project, a subsidiary of Dangote Industries Limited, is a 650,000 barrels per day crude oil refinery, located in Dangote Industries Free Zone, Ibeju-Lekki, Lagos, Nigeria.
The Dangote Petroleum Refinery is an industrial plant that transforms crude oil into various usable petroleum products such as diesel, gasoline, jet fuel, and kerosene.
Dangote Petroleum Refinery with a capacity to refine 650,000 barrels of crude oil per day covers an area of approximately 2,635 hectares in the Lekki Free Trade Zone in Lagos
