As Nigerians continue to lament the unavailability of petrol, they now also have to deal with the rising cost of the product. This has led to the worsening of long queues at fueling stations across the country due to reports of pump price of petrol being hiked to over 800 naira per litre. This new price increase has no doubt left Nigerians wondering if, now that the Dangote refinery has started production, it will give room for patriotism and nationalism and sell petrol at a lower price because Nigerians are in difficulty.
Speaking with ARISE NEWS in an interview on Wednesday, the Chairman of the Energy Transition Study Group at the Nigerian Gas Association, Olabode Sowunmi, highlighted that since Dangote Refinery is a business venture, it will no doubt keep in mind its need to make profit and sell at a price that is profitable for its business.
Sowunmi said, “Dangote Refinery is a refinery, so there is an average cost of refining. That cost is going to be passed on to the final consumer. There is an average cost to the price of crude oil. So, at the end of the day, they are going to sell not at the prices that people want, they are going to sell at a price that is competitive and to some extent, profitable for them.”
He added, “I do not know any business venture that runs like an NGO. The aim of NGOs is not to make profit, it is to develop. However, when it comes to a venture, where somebody has put in capital and somebody has taken risk and somebody has put in their own effort and spirit of entrepreneurship, the primary purpose is profit. So, I do not know why people will expect that all that investment will take place in the Dangote Refinery and there will be no profit. It is possible, but I don’t know how that will work. But whether that is the corporate strategy of Dangote Refinery to operate at a loss and have some kind of subsidy for it, which will be welcomed, I don’t know whether that will be the situation. But the facts on ground is that Dangote Refinery is a business and as a business, it is in the business of refining to make profit.”
He further emphasised that Dangote’s primary duty is no doubt to its stakeholders, saying, “Dangote too is a business and the first duty of any private business is to its shareholders. It’s not a developmental organisation, so it’s not going to run its business and its debt based on a loss. They are going to run it at what is competitive and what has an average profit for them. So, those are also facts that we as Nigerians need to come to terms with.”
Sowunmi however stated that the functioning of the Dangote Fefinery will have advantages, with one of them being that since the refinery purchases crude oil in naira rather than dollars, it is not burdened by the need to procure foreign currency, which could help stabilise prices for Nigerian consumers.
He said, “We’ll recall that Dangote’s crude oil is being sold to it in naira. That has advantages across boards in many areas. One of the things is that they are not under pressure to go and procure dollars in terms of buying one of the key things in their operation, which is the crude oil itself. Which also means that they are more or less obligated to do the pricing of their products in naira, ab initio because one of the key components of the final products is in naira. So, those are where the advantages will be.”
However, he highlighted the importance of transparency in tracking the distribution of petroleum products from the refinery to ensure accurate data on Nigeria’s consumption. If Dangote Refinery can effectively monitor and manage the distribution of its products, it could provide a clearer picture of the nation’s daily fuel usage.
“The other issue will now be, how much of the refined products that Dangote is producing will actually meet Nigeria’s capacity? As at today, nobody really knows. There are different figures. The house of statistics has their own figure, NNPC has their own figure, there are different figures in terms of what we use daily and there are a million and one reasons that are behind it. But I believe that one of the things that will check that, will be if Dangote himself as he has pledged and said, that they’d be able to monitor every single truck that leaves their depot and monitor them to where they get to. If they are able to do that and it meets our needs, then we’ll have a clear idea of the amount of consumption we do per day in terms of petroleum products.
“The best person to my mind who can give a clear idea of how much petrol can come up from Dangote Refinery is the refinery itself. It’s not the regulator. The regulator can only speak with respect to facts that have been made available them.”
Melissa Enoch
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