- Dr. Thomas Ogungbangbe warns that Dangote Refinery’s production will not lead to immediate price reductions but will ensure product availability
- He emphasizes that only the government can purchase fuel from Dangote, as the refinery operates under global market principles
Dr. Thomas Ogungbangbe, CEO of CITA and an expert in the oil industry, has explained that the commencement of petroleum production from the Dangote Refinery will not lead to immediate price reductions but will ensure product availability. He emphasized that given the current global fuel prices, only the government can purchase fuel from Dangote’s refinery.
In a conversation with a correspondent, Ogungbangbe clarified that the Dangote Refinery operates as a for-profit venture, adhering to the same economic principles as other refineries worldwide. He stated, “Dangote would only ensure availability. It does not translate to any magical price reduction because it follows the protocols of refineries globally.”
He further explained that full market deregulation could bring about competition, leading to decreased prices. However, fuel prices will remain high without deregulation due to the global pricing structure. He noted, “A litre of petrol globally is priced between 80 cents to one dollar. In Nigeria, even with the current price increase, fuel remains one of the cheapest in the world due to government subsidies.”
Ogungbangbe warned that if the government completely removes subsidies, the petrol price could reach as high as N1,500 per litre. He estimated that if Dangote were to sell petrol, it would likely be priced between N1,200 and N1,400 per litre, making it difficult for consumers to afford. He stressed that only the Nigerian National Petroleum Corporation Limited (NNPCL) can purchase PMS from Dangote and resell it at subsidized rates, as private buyers would not be able to profit.
In conclusion, Ogungbangbe advised the government to fully remove the fuel subsidy, arguing that the current system is unsustainable at prevailing prices. He noted that the government is still covering about 50% of the cost of PMS, even after recent price hikes, which is not viable in the long run.