Lagos — The Minister of State for Petroleum Resources, Timipre Sylva, has said there would not be a major drop in price of petrol even if Nigeria starts refining its oil locally.
The minister stated this while appearing alongside the Minister of Finance, Budget and National Planning, Zainab Ahmed, on NTA’s ‘Good Morning Nigeria’ programme on Monday.
According to him, whether price of petrol will be either high or low is based on a major determinant- crude oil.
Sylva said the only thing that could make local production cheaper is that there would not be a need to pay for shipping cost, adding that the cost of labour would not be too different from the international price because local refineries would pay expatriates.
“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,” he said.
On her part, Ahmed said the 650,000 barrels per day Dangote Refinery expected to come into operation next year would sell petrol at international price.
This, according to her, is because the refinery is located at the Export Processing Zone.
“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.