Local Refining, The Obvious Solution

Oil & Gas
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Thursday, December 21, 2017 /10:45PM / FBNQuest Research 

The National Bureau of Statistics (NBS) has released its latest report in its premium motor spirit (PMS) price watch series. The report shows the average monthly price for PMS (petrol/gasoline) paid by households across the country. In November it averaged N145.6/litre (l) for the 36 states of the federation and the FCT, and therefore now below the fixed upper price limit for the retail pump price of N145/l set by the authorities.

The average price of gasoline in November represented a -0.3% m/m decrease. Bayelsa State recorded the highest price for PMS at N150.5/l while Plateau recorded the lowest at N143.6/l.

The improved fx liquidity has led to some relief for players within the downstream sector. Initially, oil marketers depended solely on the parallel market for their fx requirements. However, there is now better access via the CBN’s official windows.

Furthermore, over the past year the naira has appreciated considerably on the parallel market making PMS importation relatively affordable for marketers that still source fx from that market.

There is some scarcity of PMS across the country currently due to a disgruntled trade union (PENGASSAN) over unfair labour practices. The FGN has assured the public of uninterrupted fuel supply during the festive period.

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Local refining remains an obvious solution for the high demand of PMS in Nigeria. The Dangote refinery which is underway has a daily refining capacity of 650,000 barrels. Based on industry sources, this should cover over 75% of national PMS consumption.

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