ABUJA: There are hints that the committee of the Federal Government, constituted to ensure the successful delivery of crude oil sales to local refineries in naira, will discuss more about the cost of Premium Motor Spirit, or petrol, which the Dangote Petroleum Refinery will be distributing next month.
In the upcoming weeks on the development, according to multiple officials, including oil marketers and members of the Implementation Committee on crude oil sales in naira, which is headed by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy.
In addition, they said that the committee would be drafting a framework that would determine a benchmark for the price in naira that the Dangote refinery would pay for crude, and that the Federal Government would have to determine whether to subsidize the plant’s petrol or to let Nigerians buy it at market value.
However, oil marketers declared that the cost of Dangote petrol would be higher than the current pump prices of the commodity, stressing that it would be tough for dealers to buy the commodity from the plant if the Federal Government fails to intervene in the price.
Marketers say this is the actual market price of the commodity and explain that the cost of the product from the Dangote refinery should be around this figure.
The Nigerian National Petroleum Company Limited is the sole importer of petrol into the country. Other marketers stopped importing the commodity due to their inability to access the United States dollar required for petrol imports.
In accordance with NNPC’s agreement with the government, he added, PMS was made available for retail distribution for roughly fifty percent of the landing cost.
He clarified that the business had been using a reconciliation arrangement between the government and the company to make up for the disparity in the landing price and the sale price. He said that throughout the previous eight to nine years, the company had not given any money to marketers under the guise of a fuel subsidy.
“I think there is one fact that I need to make very clear, in the last eight or nine years, this company, even as a corporation as it were, has not paid anybody a dime or one naira as subsidy.
“No one has been paid a kobo by the NNPC in the name of subsidy. No marketer has received money from us by way of subsidy,” Ajiya said.
He said the government directs NNPCL to sell the petrol it imports, at a price that is half of the landing price. According to him, at times the Federal Government pays the money and it could as well net off for it.
The cost of fuel from the $20 billion plant will be discussed by the government and the plant management in the coming weeks, our correspondent was informed on Sunday by reliable sources in the oil marketing, Federal Ministry of Petroleum Resources, and the Presidency.
They stated that the government’s options are to either pay subsidies on fuel without increasing the burden on NNPC or to allow Nigerians to purchase the product at the market price that the Dangote refinery will release it at, which will undoubtedly be high
“What has been happening is that we have been importing PMS, landing at a certain price, and the government is telling us to sell it at half price. So, that gap between that landed price and the half price is what we call shortfall or we call it a subsidy,” the CFO explained.
On August 20, 2024, They was a report that the Federal Government’s committee which was set up to ensure the implementation of crude oil sales to local refineries in naira has reached an agreement with the Dangote Petroleum Refinery for the rollout of petrol in September this year.
The Federal Government also disclosed that the sale of crude oil to Dangote Refinery and other local refineries will commence on October 1, 2024.
They said the options before the government are to either pay subsidies on petrol without piling the burden on NNPC or to allow Nigerians to buy the product at the market price to be released by the Dangote refinery, which, of course, will be high.
“The only way the government can intervene is to subsidise. There is nothing NNPC can do. I mean this. Do you want to kill the NNPC? Do you want the company to continue carrying the subsidy burden after the explanation it gave last week? It is not sustainable.
“Except you are saying NNPC will start doing whatever it can and nobody will expect profit from the company,” a source at the FMPR, who spoke in confidence due to lack of authorisation to speak on whether the NNPC would intervene in PMS price from Dangote, stated.
However, it is for Nigerians to pay the real cost of petrol or for the government to bring back subsidies. I don’t know, but it’s just those two things. They may consider this at the meeting, but for now the major discussions centre on crude supply in naira, which should be finalised in a few weeks.”
The source said the sale of crude to Dangote in naira had been settled, stressing that “his (Dangote) own portion will be sent to him. But they are still working on the framework, I know, we’ve been having meetings.
So we’re having meetings. So hopefully, I think by next week we should be able to get a clearer picture on the modalities. We meet almost every two or three times a week.”
The source noted that one major challenge is the lack of the United States dollar, but stressed that the committee “will benchmark the exchange rate for crude sale to Dangote.refinary”