With petrol prices soaring to unprecedented levels, reaching N1,400 to N1,500 per litre in some locations, stakeholders are mounting pressure on the Federal Government to reactivate its moribund refineries. The call is aimed at increasing domestic supply, enhancing competition in the downstream petroleum market, and ultimately moderating pump prices. Energy experts argue that the current high fuel costs have far-reaching implications, affecting not only commuters but also the overall economy.
Adetunji Oyebanji, a former chairman of Major Energies Marketers Association of Nigeria (MEMAN), emphasized the need for the government to reactivate its refineries. According to him, this move would expand Nigeria's refining capacity, fostering greater competition among refiners. Oyebanji cited the Dangote, BUA, and government-owned refineries as potential facilities that could contribute to a more competitive refining market if they operate at substantial capacity.
Oyebanji further explained that competition among refiners could lead to moderate petrol prices, although it may not necessarily make the product cheap. He illustrated this point by noting that with multiple refineries operating, one refiner may choose to sell at a lower price, such as N1,400, to attract customers, prompting other refiners to respond with competitive prices to retain their market share.
Dr. Joseph Obele, an energy expert and lecturer at Ignatius Ajuru University of Education, Port Harcourt, corroborated Oyebanji's views. He urged the federal authority and the Nigerian National Petroleum Company Limited (NNPCL) to revive the government-owned refineries, citing the rising crude oil prices that have continued to put pressure on the cost of petroleum products. Obele argued that restarting the refineries could strengthen domestic fuel supply and reduce Nigeria's exposure to international market shocks.
The impact of higher crude prices is already being reflected in Nigeria's downstream market, with Premium Motor Spirit (PMS) reportedly selling between N1,400 and N1,500 per litre in some locations, while Automotive Gas Oil (AGO) has risen above N2,000 per litre. Obele warned that sustained increases in petroleum prices could trigger further increases in transportation, food, medical services, and other essential commodities, deepening the financial hardship experienced by Nigerians.
Obele called for the immediate return of the Port Harcourt and Warri refineries to sustainable production, arguing that government-owned facilities should complement private-sector refineries in meeting national fuel requirements. He noted that reviving the refineries would not only increase domestic supply but also stimulate activities across the petroleum value chain, including employment for workers, contractors, marketers, transporters, and other businesses.
Meanwhile, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) clarified that the current pricing structure remains governed by the PIA's free-market framework, emphasizing that it does not determine the prices charged at filling stations. The Authority's role is to regulate market conduct, enforce applicable standards, promote fair competition, and protect consumers, rather than set the retail price of petrol.
Key points
- The Federal Government is being urged to reactivate its moribund refineries to increase domestic supply and moderate pump prices.
- Energy experts argue that competition among refiners could lead to moderate petrol prices.
- The current high fuel costs have far-reaching implications, affecting not only commuters but also the overall economy.
