The Minister of Finance, Budget and National Planning, Zainab Ahmed, has said that when the Dangote refinery starts operations, it may not lead to a significant reduction in the price of petrol in the country.
Mrs. Zainab noted that this is because the Dangote refinery would be selling at the international price. Adding that the refinery was located at the Export Processing Zone in Lagos State
According to the Finance Minister, the only benefit would be that Nigeria would not need to pay for the shipping cost of fuel.
“What we are doing is enabling the petroleum sector to actually grow. There have been a number of refineries, which have been licensed for several years. None of them was willing to start refining under the regime that we had where fuel (pricing) was controlled.
“The Dangote refinery is sitting within an Export Processing Zone, so they are insulated from that. When we buy fuel from Dangote, we will be buying fuel at the international market price. The only savings that we will be making are savings on freight, which is shipping.
“But we will still have landing cost, labour cost and the marketers will still have to put a margin. These refineries, being refineries that are supposed to have come to operate, can now come in because they are assured that when they produce, they can sell at the market rate and recover their investments and make some reasonable profits,” Mrs Zainab said on Monday while speaking on Good Morning Programme on the Nigerian Television Authority.
She further noted that the deregulation of the sector was good for the economy as it would encourage investments in refineries, adding that the Nigerian National Petroleum Corporation would not be able to rehabilitate the government-owned refineries completely because they were old and private investments is required.
“It will mean more refineries will open; they will employ people and fuel will be available in different parts of the country and not just relying on the government refineries,” she said.
“Those refineries are old and even if we turn them around, we will not be able to operate them at optimal capacity; so, while the NNPC is trying to rehabilitate them, we also need to encourage the private sector refineries to come on stream and even state governments that have the capacity,” she added.
Speaking further, the Minister of State for Petroleum Resources, Timipre Sylva, noted that the price of petrol would not drop significantly even if crude oil was refined locally.
He noted that the cost of petrol was determined by the price of crude oil in the international market, saying that as long as it remained high, petrol pump price would also not drop.
The Petroleum Minister noted that the only difference would be the shipping cost, adding that the cost of labour would not be too different from the international standard since the local refineries would be paying expatriates.
David Chima is the Group Head (Editors) at Naija Buzz News. He is a very experienced Journalist. He studied Mass Communication at the Nuhu Bamalli Polytechnic Zaria, Kaduna State, before proceeding for Advanced Studies in Mass Communication (Journalism) at the Federal Polytechnic Bauchi, Bauchi State. He previously served as the Head Senior Reporters and Publishers at 1Push.Ng and eventually Naija Buzz News. Chima is a lover of football and a very strong supporter of Barcelona Football Club Spain.