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 on TVC.
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.
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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.
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