Pinnacle Oil CEO Urges Nigerian Government to Address Economic Distortions To Reduce Petrol Prices

As the price of Premium Motor Spirit (PMS), popularly known as petrol continues to rise despite supplies from Dangote Refinery, Chief Executive Officer of Pinnacle Oil & Gas Limited, Mr. Robert Dickerman, has advised the federal government to tackle the distortions in the economy and global investors’ confidence in order to achieve a reduction in the pump price of petrol in the country.

Dickerman also attributed the rising cost of petrol and other commodities in Nigeria to the devaluation of the local currency, and urged Nigerians to moderate their expectation that the 650,000 barrels per day Dangote Refinery will cause massive petrol price reductions in the country.

The Pinnacle managing director made the submissions in Lagos while speaking at the 2024 annual conference of the Nigerian Association of Energy Correspondents (NAEC) themed, ‘Gas As Energy Transition Fuel: Navigating Nigeria’s Trilemma of Finance, Energy Security, and International Politics’.

Currently, petrol is selling between N850 and N1,000 per litre, and even above in some locations, triggered by the recent price adjustments announced by the Nigerian National Petroleum Company Limited (NNPCL), which is the sole importer of petrol and also the sole off-taker of the product from Dangote Refinery.

But weighing in on the confusion arising from the rising petrol price despite local production and supply, Dickerman urged the federal government to address the fundamental economic problems to achieve lower prices in the country.

Specifically, he said the government must restore global confidence in Nigeria’s economy and currency, create foreign investment in jobs and local production, increase tax revenue and achieve fiscal prudence amongst other actions.

These, he said, were the only way to lower petroleum products prices in Naira.

He stated, “Finally, now that we all know the global market price for any oil commodity is dollar-based, and must be converted to Naira at the Naira/USD exchange rate, we also know that the large majority of price increases we have seen in the past year are not because of government policy, price gouging or product hoarding, nor are they due to an increase in the price of crude oil. They are due to the fall in value of the Naira. Every drop in the Naira raises the cost of anything imported or market priced, whether it is gasoline or manufactured goods or food.

“We must address the root problem, which is how to restore global confidence in Nigeria’s economy and currency, create foreign investment in jobs and local production, increase tax revenue and achieve fiscal prudence.That is the only way to lower petroleum products prices in Naira.”

He however said Nigerians must stop pretending that Dangote production will cause massive price reductions in Nigeria, arguing that the underlying assumption that the $20 billion refinery should sell below market was nonsensical.

Dickerman added, “Bear in mind that the refinery can also export to vessels at market price in USD ex-refinery or even deliver to other countries directly. So if you own a business that can sell a product at x all day to one customer, why would you sell it at a lower price to another customer? The only sensible strategy for Dangote is optimisation, as it would be for any investor and operator.” 

Peter Uzoho

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