PMS price: What to expect going forward, by Uche Diala

This may not sound palatable, but unfortunately, I do not see Dangote Refinery PMS selling at any thing less than N1,000 per litre.

What will be on top of the N1,000, I can not say. I can only hazard a guess of up to between N1,200 to N1,400, especially if you consider the pump price of PMS in many other jurisdictions. No thanks to the floating or devaluation of the Naira.

Incidentally, I and some others have been saying this for quite sometime now but many people would rather listen to and re-echo postulations by those who tell them what they need to feel good, whether it is factual or logical or not.

No doubt, there will be a marginal difference between the cost of imported and domestically refined petrol.

That difference will largely come from elimination of cargo, insurance and freight (CIF) costs. I do not know if there are any duties paid on imported petrol.

Remember that uptil yesterday, according to the NNPCL, it had been selling petrol at half its landing cost which is put at a little under N1,200.

The only way, in my view, that Dangote Refinery petrol will be far cheaper than imported petrol would be if the NNPCL (read government) subsidizes the cost or is it shortfall.

There has been much talk about NNPCL selling crude to Dangote Refinery in Naira. That agreement which was reached between NNPCL and DR in 2022 and reaffirmed by the FEC last month is planned to take off from October 1st this year.

While that would definitely impact positively on the value of the Naira due to reduced volume of FOREX expended on petrol importation (I can’t say to what extent and after what period of time), I have not heard, because we have not been told, that NNPCL would sell crude to the refinery even in Naira at less than the prevailing market price of crude.

If crude is sold to the refinery at the Naira equivalent of the prevailing market price but at the prevailing exchange rate, we are pretty much in the same place in terms of the crude component of the production cost.

I have also heard questions as to why the cost of production would be computed in dollar. While I can’t confirm that, methinks, it doesn’t make much of a difference because whatever cost in dollar would be converted to Naira at the prevailing exchange rate to arrive at a cost in Naira for the domestic market.

For me, it is safer to approach this issue from a realistic perspective to avoid disappointments that come from unrealistic expectations.

It is very important, like I have advised before now, that both the Dangote Refinery and NNPCL speak up and come clean with Nigerians from the get go. Such transparency and forthrightness would help with citizens’ understanding and cooperation.

The secrecy and silence which I do not know if it is deliberate helps to fuel speculations both in opinions, and prices which is not healthy for the nation and the consumers.

Whatever is decided, the government must double down on efforts to shore up the value of the Naira because, whether any one agrees or not, it is the singular factor that has worsened this situation.

The government should be intentional and serious minded about this. It has an opportunity now to tidy up and sanitize this entire issue of petrol prices, scarcity and queues once and for all.

As far as I am concerned, if we still have fuel queues two weeks after Dangote Refinery has started production and supply of PMS and after the kind of prices Nigerians are paying currently, that would be unfair to Nigerians and then I would conclude that the government has failed in this regard.

The time has come for all of us to start taking stock and for continous assessment. There is no room for sentiments in this, because human lives are involved.

Permit me add, as hard as it to say, that I personally do not support any form of price manipulation or subsidy hereon, no matter by whatever name called. It would only give room for further exploitation of Nigerians and possible corruption. We are already in the grind.

Except the government can work out any ingenious way(s) to cut the costs, which does not include payment of differentials or shortfalls.

I also reiterate that the Dangote Refinery should fix its PMS price and sell to any marketer licensed and capable to buy and sell while NNPCL should stop being a monopoly and fixing pump prices. Let the PIA fully kick in.

Finally, I lay no claim to being an authority in this field or on this matter. So, I am open to enlightened, objective and informed opinions.

I wish us all godspeed on this journey into an uncharted and extremely discomforting territory.

-Diala is a Public Affairs commentator