Oil Experts Doubt Significant Fuel Price Drop Despite Refinery Operations
Oil and gas experts have expressed their views on the potential impact of the upcoming operations of the Port Harcourt and Dangote refineries on the cost of petroleum products. According to these experts, while the commencement of these refineries’ operations may lead to a marginal reduction in the cost of petroleum products, it is unlikely to cause a significant price crash.
In an interview with the News Agency of Nigeria (NAN), the experts explained that the elimination of ancillary costs such as freight and port charges could contribute to a slight reduction in prices. However, they emphasized that the reduction may not be substantial enough to be considered a crash in prices.
The Federal Government recently announced the mechanical completion and flare start-up of the Port Harcourt Refining Company Limited (PHRC), with the subsequent streaming of its phase two scheduled for 2024. The PHRC consists of two refining units, with a total refining capacity of 210,000 barrels per day (bpd).
Associate Professor Olanrewaju Aladeitan from the University of Abuja stated that while there might be some marginal reduction in petrol prices due to the elimination of certain costs, the price of petroleum products is still likely to be determined by factors such as international market prices for crude oil.
Economic Expert Yushau Aliyu noted that reaching the mechanical test stage of the refinery is a positive sign that part of the country’s refined Premium Motor Spirit (PMS) deficit will be addressed. He also suggested that the new Nigerian National Petroleum Company Limited (NNPC Ltd.) could respond by reducing pump prices in the short term.
Another oil and gas expert, who chose to remain anonymous, criticized the situation where the government spends significant amounts, including foreign currency, on fuel imports rather than investing in refinery repairs. This expert expressed skepticism about the potential for fuel prices to crash unless all refineries, including those in Warri and Kaduna, are fully operational.
It is important to note that the pump price of PMS has risen to N660 per litre at various fuel stations, with NNPC Ltd.’s retail outlets selling at N617 since the removal of subsidies in May 2023. This removal has led to increased hardship and suffering due to inflation and the higher cost of goods and services.
Source: NAN
