Ajuri Ngelale, the Senior Special Assistant to President Bola Ahmed Tinubu on Public Affairs has said that more refineries in Nigeria, will not lead to lower fuel prices. He stated this during a recent interview via TVC News.
According to him, people often say that if the country’s refineries were working, fuel would be cheap for Nigerians at the pump, but nothing could be further from the truth. He said:
- “That is a myth, it does not happen anywhere in the world, even if we had the most refineries producing the most PMS in the world, you would find that the most prolific PMS producers with their refineries do not charge different from the countries without refineries. I am not saying that we should not have refineries, but there are benefits to having working refineries.
- “This is why phase one of our Port Harcourt Refinery is coming on stream in December 2023 and phase two by the end of 2024. Dangote Refinery is already up and is going to start dishing out products very soon.
- “BUA 200,000 bpd Refinery is coming up in Akwa Ibom, we are going to have an excess supply that we can export internationally.
- “The point I am making on this is that the reason why the price at the pump will not go down irrespective of what our refining capacity is as a country is that nobody spends tens of billions of dollars on building a refinery because of charity or corporate social responsibility, they do it to make money.”
Ngelale also argued that no matter the number of oil marketers bringing the product into the country, the price is dependent on the price of crude oil in the international market.
According to him, when crude oil prices are high, fuel pump prices will be high, but when crude oil prices are low, fuel pump prices will be low.
He said the market fundamentals apply to every country, not just Nigeria.
More insights
According to Ngelale, the benefit of having refineries in the country is not that people will have cheap fuel, but that the country will save hundreds of millions of dollars in transportation and logistics costs that are spent on an annual basis.
He explained further that money is being spent to bring refined fuel from an international refinery to Nigeria via shipping.
He also said about $10 billion a year is spent on foreign exchange earnings that are paid out to the refiners and partners to get the product transformed from crude to refined premium motor spirit (PMS).
All these can be saved if the country has functional refineries, but it does not guarantee cheap fuel at the pump.