Tuesday, September 15, 2020 / 11:28 PM / By
Eniola Akinkuotu of Punch Newspaper / Header Image Credit: Global Trade Review
The Minister of Finance, Budget and National Planning,
Zainab Ahmed, has said when Dangote Refinery kicks off next year, it may not
significantly reduce the price of petrol because the refinery will be selling
at the international price.
Ahmed said this is because the refinery is located at
the Export Processing Zone in Lagos State.
The minister said this on NTA's 'Good Morning Nigeria' programme on Monday, which was monitored by our correspondent.
She said the only thing Nigeria would not need to pay
is shipping cost.
Zainab said, "What we are doing is enabling the
petroleum sector to actually grow. There have been a number of refineries that
have been licensed for several years. None of them was willing to start
refining under the regime that we had were fuel was controlled.
"The Dangote refinery is sitting within an Export
Processing Zone so they are insulated from that. When we buy fuel from Dangote,
we will be buying fuel at the international market price. The only savings that
we will be making is the savings of freight which is shipping.
"But we will still have landing cost; labour cost and
the marketers will still have to put a margin. These refineries being those
that are supposed to have come to operate can now come in because they are
assured that when they produce, they can sell at market rate and recover their
investments and make some reasonable profits".
She said the deregulation of the sector which led to
the increase in petrol price was good for the economy as it would encourage
investments in refineries.
Ahmed added, "It will mean more refineries will open,
they will employ people and fuel will be available in different parts of the
country and not just relying on the government refineries.
"Those refineries are old and even if we turn them
around, we will not be able to operate them at optimal capacity, so while the
NNPC is trying to rehabilitate them, we also need to encourage the private
sector refineries to come on stream and even state governments that have the
capacity".
Also speaking, the Minister of State for Petroleum Resources,
Timipre Sylva, said the pump price of petrol would not drop significantly even
if Nigeria is refining crude oil locally.
He said the major determinant of the cost of petrol
was crude oil and as long as it remains high, the cost of petrol will not drop.
Sylva said the only thing that could make local
production cheaper is that there would not be a need to pay for shipping cost.
He said the cost of labour would not be too different
from the international price because local refineries would be paying
expatriates.
The minister added, "For now, our supply is coming
mostly from imports as we all know. And that doesn't really have an impact on
the price as people would think. The only difference that will happen if our
supply was coming from in-country would have been the freight price. But
whether it is coming from outside or coming from within, it will be about the
same cost because when you import, the only difference is that you will have to
pay the freight. But it is the same cost of crude and whether you are refining
or not, you will have to pay the market price for the crude".
The Dangote refinery is expected to commence
operations next year with a capacity of refining 650,000 barrels of crude oil
per day.
Credit:
The post Dangote
Refinery Will Sell Petrol at International Price, Says FG first appeared in Punch on September 14, 2020.
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