According to Channels Television, Oil and gas expert Henry Adigun has raised concerns about the pricing of Premium Motor Spirit (PMS), also known as petrol, from the $20 billion Dangote Refinery in Lagos. Adigun highlighted that production costs, especially those denominated in US dollars, might prevent the refinery from offering petrol at prices lower than the current pump price set by the Nigerian National Petroleum Company Limited (NNPCL).…..For More READ THE FULL ARTICLE HERE ▶▶
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According to Adigun, one of the key factors influencing the pricing is the quality of petrol produced at the Dangote Refinery. He pointed out that the petrol coming from the refinery is of the highest quality globally, and with higher quality comes higher pricing. This underscores the financial challenges associated with maintaining such a high standard of production, particularly when the costs are in foreign currency.
Adigun explained that the oil and gas industry operates predominantly in US dollars, making the pricing of fuel highly dependent on international market dynamics. He emphasized that Aliko Dangote, the owner of the refinery, would need to set prices based on his operational costs, which include the acquisition of crude oil from both domestic and international sources.
Furthermore, Adigun clarified that the Dangote Refinery does not solely rely on Nigerian crude oil for its operations. While it receives 40% of its crude from the Nigerian National Petroleum Corporation (NNPC), the refinery still needs to purchase additional crude oil from foreign sources such as the United States. This necessitates a blending process that involves both Nigerian and American crude to produce the desired output, which further complicates the cost structure.
He also shed light on the technical challenges associated with the refinery’s single-train setup. Due to the limitations of the refinery’s capacity, it is impossible to use just one type of crude to produce all the required petroleum products, adding another layer of complexity to the pricing issue.
Adigun said, “He (Dangote) has cost. The crude is given to him at a cost. He only gets 40% of the crude from NNPC, and spends money to buy the remaining from America and co. It’s a single-train refinery, you can’t use only one crude to produce all products. This is technical in a way.
“So, you have to blend American crude with Nigerian. That’s why, if Nigeria gives him all the barrels, he still has to import and blend them. People should not forget that.…..For More READ THE FULL ARTICLE HERE ▶▶
