Industry experts remain skeptical about the possibility of significant reductions in petrol prices in Nigeria, despite the recent operational start of the Dangote Refinery.
While the refinery is expected to enhance the stability and reliability of fuel supply, a substantial decrease in pump prices is not anticipated.
The Dangote Refinery, boasting a production capacity of 650,000 barrels per day, has begun processing petrol, according to Devakumar Edwin, Vice President at Dangote Industries Limited.
This move is expected to provide a more consistent fuel supply, with the Nigerian National Petroleum Company Limited (NNPC Ltd) set to be the exclusive buyer of the refinery’s output.
Dangote Group President Aliko Dangote noted that the refined petrol could reach filling stations across Nigeria within 48 hours, contingent on NNPC Ltd’s distribution efficiency. However, experts caution that an improvement in supply does not necessarily equate to lower prices.
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Energy analyst Dan Kunle highlighted that expectations of an immediate drop in fuel prices are misplaced. “Petroleum product pricing is influenced by global market dynamics and various economic factors,” Kunle explained.
He emphasized that while the refinery’s production capacity and supply chain efficiency are crucial, they do not guarantee a dramatic reduction in prices.
Kunle drew parallels with the telecommunications sector, where initial high prices followed the entry of major players like MTN and Airtel, despite their significant market presence. He noted that, similar to telecoms, the cost of crude oil on the international market will continue to play a critical role in determining petrol prices.
For a substantial price reduction, Kunle suggested that factors beyond production capacity, such as changes in global crude oil prices and overall market conditions, must align favorably.
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