A group of oil marketers has disclosed why the price of a litre of fuel cannot drop to as low as N300 in Nigeria.
The Major Energy Marketers Association of Nigeria (MEMAN) made this disclosure in a statement where they also denied reports that the local refining of crude oil could lead to fuel selling for N300 per litre.
A spokesman of the Crude Oil Refinery Owners Association of Nigeria (CORAN), Eche Idoko had suggested that fuel would start selling for around N300 per litre once the Dangote Petroleum Refinery and other indigenous modular refineries began large-scale production.
Idoko had also said that for such reduction to happen, the federal government must ensure a regular supply of crude oil to local refineries.
“Many companies today benefit from the importation of petroleum products at the expense of Nigerians,” Idoko said.
“If we start producing PMS in large volumes with adequate crude oil supply, I can assure you that the pump price could drop to N300 per litre.
“Why make Nigerians pay almost N700 per litre when allowing local refineries to operate would reduce the price? Is it to satisfy global refiners profiting from us?”
A former MEMAN chairman and current CEO of 11 Plc, Tunji Oyebanji, however told Channels Television on Monday that petrol prices could not drop to N300 per litre.
“One barrel of crude oil contains 159 litres and costs about $80. Multiplying this by N1,400 gives you N112,000 per barrel, which, when divided by 159, results in N702 per litre of crude alone, excluding refining, transportation, finance costs, and distribution margins,” Oyebanji said.
Oyebanji further argued that since crude oil which is the raw material for PMS is priced in dollars, a substantial price reduction is very much unlikely.
“We were selling diesel for N1,700 to N1,800 per litre, but as soon as Dangote refinery started production, the price dropped to N1,200 per litre.
“This indicates that prices can indeed drop. Currently, diesel prices could fall further, but the exchange rate keeps them above N1,000 per litre.
“If the exchange rate stabilizes, diesel prices could drop below N1,000 per litre.
“Even though Dangote buys crude in dollars within Nigeria, he could mitigate some exchange rate impacts by not importing.”
