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Why Petrol, Diesel Prices May Not Drop Despite Dangote Refinery — Experts

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Experts believe that prices of petrol and diesel may not crash significantly despite the commencement of production at the Dangote Petroleum Refinery.

With the removal of subsidy on petrol in May 2023, the price per litre of petrol jumped from around N184 to over N600 depending on the location. Diesel also sells for about N1500 per litre at retail outlets.

Petrol marketers are optimistic that production at Dangote refinery will significantly force down the prices of petrol and diesel.

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But the experts said though the behemoth refinery is located in Lagos, Nigeria, the input cost for the operationalisation of the $20bn facility is import-dependent, adding that the volatility of the foreign exchange rates might make it difficult for any marginal reduction in the prices of the premium commodities.

These were the thoughts of the Publisher of Sweet Crude Reports, Hector Igbikiowubo; and Nairametrics Founder, Ugodre Obi-Chukwu; on Inside Sources with Laolu Akande, a socio-political programme aired on Channels Television on Friday.

Both Igbikiowubo and Obi-Chukwu commended Africa’s richest man, Aliko Dangote, for defying all odds to ensure that his dream to build a functional refinery came to life.

They said Dangote demonstrated that the Federal Government has no excuse not to get the country’s four dormant refineries working and urged the Nigerian National Petroleum Company (NNPC) Limited to increase crude supply to the private refinery.

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The billionaire business tycoon recently said his refinery would continue to import 24 million barrels of West Texas Intermediate crude due to insufficient local crude production and supply by the state-run NNPC.

The experts said though the private refinery won’t solve Nigeria’s energy security needs, its operations would go a long way in making premium petrol products available in the country.

The Dangote Refinery cannot solve the problem because the Dangote Refinery will continue to pay for crude oil in USD (United States Dollar),” Igbikiowubo said.

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“The question now is how come the NNPC isn’t allotting all of its 445,000 barrels per day to the Dangote Refinery for refining? Why is it convenient to export crude oil when you have a facility like the Dangote Refinery up and running? You make more money if you export refined petroleum products than if you export crude oil.”

Obi-Chukwu agreed with Igbikiowubo that the dominance of the greenback in the operational cost of the Dangote Refinery might not necessarily lower the cost of the refined products for end users.

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Obi-Chukwu said, “As much as the refinery is local, most of the input cost for that refinery is still going to be imported. Whether it is the personnel that will service the refinery. Whether it is the spare parts that will be changed and serviced. Even the crude itself is also being imported.

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“A lot of the breakdown of the cost still has foreign components in there. So, it is quite unlikely that you might see a substantial amount of savings to the end consumers. Nevertheless, even if we get 10% savings, it is still better than what we currently have.”

The refinery sited in Lagos and owned by the billionaire businessman commenced operations last December with 350,000 barrels a day. The refinery hopes to achieve its full capacity of 650,000 barrels per day by the end of the year.

The refinery has begun the supply of diesel and aviation fuel to marketers in the country while petrol supply is expected to commence mid-July.

Energy Security

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The experts said though the Dangote Refinery has been operational, the country’s four refineries sited in three locations across the country should be made to function to guarantee energy security for the country.

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The four state-owned refineries which are in dilapidated condition are sited up north in Kaduna with three units sited in the southern region – Port Harcourt and Warri. Attempts to get them working for about two decades have not been successful despite billions of naira spent on turnaround maintenance.

The newspaper publishers believe the Bola Tinubu administration should do all in its ability to make the state-owned refineries work.

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Igbikiowubo said, “The essence of having the NNPC refineries working is to guarantee energy security for the Nigerian state.”

He said though the NNPC has about 20% stake in the Dangote Refinery, the refinery does not belong to the Nigerian state.

“We should have a coherent energy security in place,” he said. “If you have refineries, those refineries should work.”

Igbikiowubo said privatisation of the state-owned refineries does not guarantee energy security as the private company is interested in profit-making for its shareholders and not necessarily ensuring that the populace gets the premium commodities easily and at cheap rates.

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“Where is NITEL today? It was privatised. Where is Daily Times today? It was privatised. We need to be accountable. The money sunk into the refineries, what happened to them?”Igbikiowubo asked.

“Last year, the petroleum minister granted an interview that the Port Harcourt Refinery would be up by December. This is June and nothing has happened. He is not being held to account.”

He said subsidy removal should be predicated on local refining and not import-dependent products controlled by the vagaries of foreign exchange.

“You have a group of persons who are benefitting with the status quo and they will do everything to ensure the status quo remains,” said the Sweet Crude Reports publisher.

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‘Privatise With Clear Mandate’
The publisher of Nairametrics posited that privatisation can work – and it has worked before in other sectors of the country – if done the right way.

We’ve practiced one model before, the government trying to run the refineries. It hasn’t worked. What we see now is funds being misappropriated from the very limited funding space that we have as a country and these funds are being squandered. So, there is no point. The same thing with the Ajaokuta Steel.

“You have to privatise properly with a clear mandate and key performance indicators including public list on the Nigerian Stock Exchange (NSE),” he said.

He urged the government to set the right policies to allow private businesses to flourish in the country.

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CAC To Cancel Certificates Of BDCs With Revoked Licences

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The Corporate Affairs Commission (CAC) has said it would cancel the certificates of incorporation of Bureaux De Change(BCDs) whose licences have been revoked by the Central Bank of Nigeria( CBN).

The Nation reported in February the CBN revoked the licences of 4,173 Bureau De Change operators over their failure to meet regulatory guidelines.

In a statement by its acting Director, Corporate Communications, Sidi Hakama, CBN explained that the regulatory provisions flouted include nonpayment of all necessary fees within the stipulated period.

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CBN said: “The affected institutions failed to observe at least one of the following regulatory provisions: Payment of all necessary fees, including licence renewal, within the stipulated period in line with the guidelines.

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“Rendition of returns in line with the guidelines; compliance with guidelines, directives, and circulars of the CBN, particularly Anti-Money Laundering, Countering the Financing of Terrorism and Counter-Proliferation Financing regulations.”

However, in line with the above directive by the CBN, the CAC in a notice on its website on Wednesday, said the certificates would be cancelled within three months if the affected companies do not change the names and objects of such companies.

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The general public is hereby informed that following the revocation of the operational licenses of 4,173 Bureau De Change companies by the Central Bank of Nigeria vide a Federal Republic of Nigeria Official Gazette (Vol. 111) No. 37 of February 27, 2024 for noncompliance with Regulatory Standards, the Corporate Affairs Commission in the exercise of its powers under section 8(1)(e) of the Companies and Allied Matters Act, 2020 advises these companies to within three months from the date of this publication, change the names and objects of such companies.

“Failure to change the names and objects within the stipulated time frame shall result in cancellation of certificate of incorporation and dissolution. It is to be noted that it is unlawful for a company whose certificate has been deemed dissolved to carry on business,” the CAC notice reads.

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FG Suspends Taxes On Maize, Wheat, Rice, Others

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The Federal Government has suspended duties, tariffs and taxes on some essential food items imported through land and sea borders.

Minister of Agriculture and Food Security, Abubakar Kyari, announced this at the National Press Centre, Abuja.

Kyari also said the Federal Government has also inaugurated the Renewed Hope National Livestock Transformation Implementation Committee to develop and implement policies that prioritize livestock development and align with the National Livestock Transformation Plan.

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He stated that the listed food items, which include maize, wheat, husked brown rice and cowpeas, will enjoy a 150-day Duty-Free Import Window.

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He added that the move is part of the Presidential Accelerated Stabilization and Advancement Plan, which is aimed at achieving food security and economic stability in the country.

According to him: “The Federal Government has announced a 150-day Duty-Free Import Window for Food Commodities, suspension of duties, tariffs and taxes for the importation of certain food commodities (through land and sea borders). These commodities include maize, husked brown rice, wheat and cowpeas.

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“Under this arrangement, imported food commodities will be subjected to a Recommended Retail Price (RRP).

“I am glad to reiterate that the Government’s position exemplifies standards that would not compromise the safety of the various food items for consumption.

“In addition to the importation by the private sector, the Federal Government will import 250,000MT of wheat and 250,000MT of maize. The imported food commodities in their semi-processed state will target supplies to the small-scale processors and millers across the country.”

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CAC Extends PoS Registration Deadline 

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The Corporate Affairs Commission has announced the approval to extend the mandatory Point of Sales agents, super agents and sole agents registration to September 5th, 2024.

The commission made the announcement in a statement signed by its management and posted on its Facebook page on Saturday, giving a 60-day extension.

It said the extension is to give sufficient time to operators particularly those in remote areas who might have encountered network challenges to so register and continue with their businesses.

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The statement read, “The Corporate Affairs Commission wishes to notify Fintech Operators also known as Point of Sales Operators that the initial deadline of 7th July 2024 given for the registration of sole Agents, Super Agents and Agents has been extended for sixty days beginning from 7th July 2024 to the 5th September 2024.

“This is to give sufficient time to Operators particularly those in remote areas who might have encountered network challenges to so register and continue with their businesses.”

It added operators who continue to disobey after the new deadline will risk losing their businesses and facing prosecution for assisting criminal activities.

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“Operators who fail or refuse to register at the end of the extended deadline run the risk of losing such businesses and prosecution for aiding and abetting criminal activities,” it said.

 

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