Lagos — The Major Oil Marketers Association of Nigeria, MOMAN has said prices of petroleum products would not drop significantly even if the federal government either decides to revamps the old refineries or to construct new ones in-country.
While fielding questions from journalists during the Association of Nigerian Energy Correspondents, NAEC’s maiden webinar series on Friday, MOMAN Chairman, Tunji Oyebanji explained that crude oil would still be sold to local refiners at international prices hence, just a little margin that usually add up as a result of importation cost would be knocked off from what consumers would eventually pay for the products.
“When you take crude to Europe for refining, it means you have to transport it there. So, by definition, if you take crude to refine here, obviously, the distance of cost should be eliminated.”
“But in the value chain, transportation is not just what defines cost of the products,” he said.
“If crude is sold at 40 dollars per barrel at international market, nobody would sell it to local refiners at 20 dollars per barrel because he is in Nigeria. So, price differentials would just be what would have been spent exporting the crude to other countries to be refined. So, by the time you add up other factors, although there would be reduction in prices but the margin wouldn’t be as wide as expected.”
“It might be cheaper but it wouldn’t be so cheap,” adding that Nigerians should banish the thought of cheaper petroleum products if refineries are cited locally.
Themed: Challenges and Impact of a Deregulated Downstream Sector on Nigeria’s Economy, Oyebanji who was the guest speaker harped on the econometrics of a fully deregulated downstream sector.
In his opening remarks, Vice Chairman of NAEC, Mr. Ugo Amadi, said despite the challenges that came with the COVID-19, a good government is expected to take decisions that would reshape the economy, part of which was to remove subsidy, and deregulate the downstream sector.
“The issue of reforming our downstream sector such as Refining and Distribution of petroleum products has been on for quite some time, although, it was only recently that the federal government removed subsidy, leading to increment in petrol prices. As a matter of fact, the retail price of petrol increased by about 10 percent to about N160 per litre”.
“As a result, many Nigerians, including the Nigeria Labour Congress and the main opposition party, PDP, condemned the price increases which unfortunately happened amidst the biting impact of the COVID-19 pandemic”.
“Absolutely, the country is today plagued by multiple challenges such as COVID-19, low earnings, near-collapse of the oil market, floods, threats of terrorism and banditry, however, notwithstanding the challenges, a good government must take decisions for the people’s good”, he said.
In her closing remarks, the Association’s Public Relations Officer, OpeOluwani Akintayo added that the take home point for the attendees was for all to join hands in ensuring the smoothest transitioning of the downstream sector from that plagued by subsidy, to a free market where both consumers and investors would get value for their money.
Representatives from MOMAN members in attendance were Total Nigeria Plc, 11 Plc, Conoil Plc, Forte Oil Plc, MRS Oil Nigeria Plc, and OVH Energy Marketing Limited.
The session was also joined by representatives from Oando Plc, and the Nigerian National Petroleum Corporation, NNPC.