How More Refineries in Nigeria Won’t Make Fuel Cheaper, Presidency Reveals

The Senior Special Assistant to President Bola Tinubu on Public Affairs, Ajuri Ngelale, has debunked the myth that more refineries in Nigeria would lead to lower fuel prices.

He said that the price of fuel is determined by the international market and not by the local refining capacity.

He made this clarification during an interview on TVC News, where he also explained the benefits of having working refineries in the country.

Ngelale said that people often assume that if Nigeria’s refineries were working, fuel pump prices would be cheap.

He said that this was not true, as even the most prolific fuel producers in the world do not charge differently from the countries without refineries.

 He said that no one builds a refinery for charity or corporate social responsibility, but for profit.

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.

“So that is why you find that no matter how many oil marketers you have, bringing the product into the country, no matter how many refineries you have producing mass amount of PMS (fuel), the price is dependent on an international benchmark of what the crude oil per barrel is.

“What the cost is. When the oil prices are high, the prices of the pump will go up and when the oil prices go down, the prices of the pump will go down.”

Ngelale said that the benefits of having refineries in Nigeria include saving millions of dollars in transportation and logistics costs, as well as foreign exchange earnings that are paid to foreign refiners and partners. He said that having local refineries would also create jobs and boost economic activities.

He said: “The benefit of having refineries in the country is not that you will have cheap fuel. No. The benefit is that you would have saved the country millions of dollars in transportation and logistics costs that we are spending on an annual basis of having to put refined PMS from an international refinery on the water to come to Nigeria’s shores we will have to offload and send to our distribution centres. You save that money.

“In addition to that, you save about $10bn per year on foreign exchange earnings that we are having to pay out to our refiners and partners to get that product exchanged from crude to refined PMS. We saved all that money within the Central Bank as a result of having a local refinery. So there are benefits, big benefits but one of them is not having cheap fuel.”

Ngelale also revealed that phase one of Port Harcourt Refinery would be operational by December 2023 and phase two by the end of 2024.

He also said that Dangote Refinery and BUA Refinery were expected to start production soon, adding that Nigeria would have an excess supply of fuel that could be exported internationally.

He said: “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.”

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