According to reports, the Dangote Refinery and oil marketers have stepped up their efforts to decide on the final price and distribution of gasoline to filling stations around the country.
According to information obtained, the Dangote Refinery, which has the capacity to refine 650,000 barrels of crude oil per day (bpd), plans to start producing and distributing the product in May 2024. At the moment, the majority of the product is imported from overseas markets.
Vanguard claims that the parties have been meeting to discuss price, distribution, and profits with insurers and transporters, among other value chain participants.
Recall that depot owners sell the commodity to independent marketers at N640 per litre after purchasing it from NNPC Limited for N556 per liter.
However, it was discovered that independent marketers had offered the Dangote Refinery management, with whom they are now in conversation, N550 per liter.
“We have been discussing with Dangote Refinery,” stated Abubakar Migandi Garima, President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), in response to a magazine that reported the development. The conversation is still continuing on, with the main topics being pricing, margins, and other matters.
“We have suggested that the lifting price in Lagos be set at N550 per litre. Because of the distance and expense of supplying gasoline to various regions, the product’s price will vary throughout Nigeria.
“We can arrange to lift the product when it comes on stream, but we are now waiting on Dangote Refinery to finish and communicate the price per litre.
Because the majority of the crude oil is readily available locally and transportation costs are eliminated, we anticipate that locally refined gasoline will be less expensive than imported gasoline.
According to Professor Wumi Iledare, Executive Director of the Emmanuel Egbogah Foundation for Petroleum and Energy Industry Economics and Policy Advocacy, Nigerians would soon or later be able to take advantage of lower gas prices due to the Dangote Refinery’s upcoming opening.
“There is a significant correlation between the price of petroleum and the cost of acquiring crude oil,” he stated. The marginal contributions come from the opportunity cost of capital and the refinery operating costs. While the expenses of distribution and retailing are significant, the cost of crude is most essential.
“Therefore, ceteris paribus, reduced gasoline prices in Nigeria are a possibility when Dangote Refinery runs at full capacity.”