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In a move to address the economic strain faced by Nigerians, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has raised concerns about the pricing of petrol produced by Dangote Refinery. According to PETROAN’s spokesperson, Joseph Obele, the refinery’s current petrol pricing model is problematic, given the reduction in production costs to below N600 per liter. This decrease is largely due to the Federal Government’s “crude-for-naira” concession granted to Dangote Refinery, which has effectively minimized the input costs of crude oil for the facility.

A Call for Localized Pricing: Why International Market Rates Aren’t the Answer

The Dangote Refinery has positioned its petrol prices at international market levels, asserting that global rates should dictate domestic pricing. Obele and other industry stakeholders argue that this approach is both economically and ethically flawed. “The dynamics and the effects of the international market and Nigeria are not the same,” he emphasized during a recent broadcast on Nigeria Info FM 99.3. He believes that Dangote should price petrol based on local production costs plus a reasonable profit margin, rather than indexing it to global rates.

Nigeria, as an emerging market with significant socio-economic challenges, is vastly different from other nations where pricing policies are often guided by international norms. With high inflation and low minimum wages, setting petrol prices at international rates imposes unnecessary hardship on Nigerian citizens and businesses. The decision to adopt this pricing template fails to acknowledge the economic realities of Nigeria, where affordable energy is not just a commodity but an essential factor in daily life and economic growth.

Substantial Government Concessions Demand Consumer-Friendly Pricing

The Nigerian government has extended several generous concessions to Dangote Refinery over the course of its establishment. Not only has it received crude at significantly reduced rates, but it also benefited from foreign exchange concessions that were far more favorable than the official rate. These extraordinary supports were intended to foster a refinery that would drive affordable energy for Nigerians, ultimately providing relief from the high import-based fuel prices.

Joseph Obele criticized Dangote Refinery’s decision to overlook these benefits in its pricing model. “In a country where inflation is high and the minimum wage is poor,” he argued, “it is wrong for Dangote to base our petrol buying rate on the international market.” The concessions granted by the government signal a responsibility to prioritize Nigerian consumers in price-setting, aligning with national economic policies that aim to keep living costs manageable.

Economic Relief for Nigerians: An Immediate Need

The high cost of petrol affects every sector in Nigeria, as transportation, manufacturing, and goods prices are all tied to fuel costs. Reducing petrol prices to reflect lower production costs would create a ripple effect, potentially easing inflationary pressures and enhancing purchasing power for Nigerian households and businesses. In turn, this could foster a more stable economic environment, supporting growth and development across various sectors.

PETROAN’s stance reflects a growing call among industry players and consumers alike: that Dangote Refinery, having benefited significantly from local resources and concessions, must adjust its petrol pricing to meet local economic needs. The path forward, according to Obele, is clear. “Dangote should not have fixed his price on the international market,” he emphasized. “He should have fixed his price on cost of production plus the margin.”

Conclusion: An Opportunity to Set a New Standard

By aligning petrol prices with local production costs, Dangote Refinery has the opportunity to set a precedent in the oil and gas industry for pricing that respects both economic principles and social responsibility. Such a decision would underscore the refinery’s commitment to contributing to Nigeria’s economic resilience and could serve as a powerful example for other stakeholders in the sector.

As PETROAN and other industry players continue to advocate for this change, all eyes are now on Dangote Refinery to see if it will respond to these calls for a price adjustment that reflects the true cost of production and acknowledges the concessions it has received. A shift in this direction could mark a significant step toward a more stable, sustainable, and consumer-friendly fuel market in Nigeria.