Dangote, Port Harcourt refineries: Nigerians voice out frustrations amid high fuel price

Reactions have continued to trail the persistent high cost of Premium Motor Spirit, PMS, commonly known as petrol in Nigeria despite having two functional refineries in the country: Dangote and Port Harcourt refineries.

Many Nigerians say the price of fuel was expected to reduce with the coming on board of the two refineries in the country.

the first petrol price hike occurred shortly after President Bola Tinubu announced subsidy removal in May 2023, causing a major price disruption in the petroleum industry.

After the announcement, the Nigerian National Petroleum Company Limited, NNPCL, raised the price from N195 to between N448 and N557 per litre- a 185.64% increase.

The federal government, however, defended the hike, explaining that the subsidy, which cost over N400 billion monthly, was unsustainable.

Barely a month later, precisely June 2023, the price of petrol rose again from N557 to N617 per litre, an increase of 10.77%.

NNPCL attributed the hike to market dynamics, with the President of the Independent Petroleum Marketers Association of Nigeria, IPMAN, Chinedu Okoronkwo, confirming that global economic factors beyond local control were responsible for the increase.

Again in September 2024, the price jumped by 45.38% to between N855 and N897 per litre.

In a statement, NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, disclosed that the company was under severe financial pressure, which posed a threat to the sustainability of fuel supply, adding that the increase resulted from financial difficulties, including high debts to petrol suppliers.

The most recent increase followed NNPCL’s decision to step back from its role as a middleman between marketers and the Dangote Refinery.

This opened the market to direct dealings between the refinery and marketers.

Consequently, NNPCL and other fuel stations adjusted their pump prices to align with refinery costs, leading to a 15% increase to N1,030 per litre.

Dangote Oil Refinery commenced petrol processing following delays caused by recent crude shortages.

A vice president at Dangote Industries Limited, Devakumar Edwin, said the Nigerian National Petroleum Company Limited, NNPCL, the country’s sole importer of petrol, would exclusively purchase the refinery’s petrol.

The news came a day after the NNPCL said it was grappling with severe financial challenges as it battles mounting debt to petrol suppliers, raising concerns over the sustainability of Nigeria’s fuel supply.

when the Group Chairman of Dangote Industries Limited, Aliko Dangote, announced the official rollout of Premium Motor Spirit, PMS, commonly known as petrol, on Tuesday, 3 September 2024, Nigerians were filled with hope and optimism for a reduction in fuel price.

However, the hope was dashed as petrol prices have increased twice since the commencement of operations at the Dangote Refinery.

This confirmed the position of the Chief Corporate Communications Officer for the Nigerian National Petroleum Company Limited, NNPCL, Olufemi Soneye, when he stated that the refinery’s operations alone do not guarantee lower fuel prices.

According to Soneye, global market forces determine the pricing of petroleum products from any refinery, including the Dangote Refinery.

Shortly after Dangote refinery began production, the NNPCL also later announced that the Port Harcourt refinery had begun production after a long period of rehabilitation.

In a wide celebratory mode, NNPCL, announced the resumption of production of petroleum products at the old Port Harcourt Refinery, which has an installed 60,000 barrels per day (bpd) nameplate capacity.

A respondent, Hassan Alowonle said for many years, Nigerians have slightly enjoyed democracy and good governance until when the current President, Bola Ahmed Tinubu removed the fuel subsidy.

“The price of the fuel has always been friendly even during the tenure of former President of Nigeria, Goodluck Ebele Jonathan.

“During his time, there was a mass protest over the hike in fuel price but many Nigerians can’t compare the administration with the current government of President Bola Ahmed Tinubu.

“When no refinery was working in the country, the government ensured it subsidized the price of the fuel, giving Nigerians the opportunity to buy PMS at a cheaper rate.

“Even when the immediate former President of the country, Muhammadu Buhari handed the baton to Bola Tinubu, the price of the fuel was N210.

“However, when Nigeria now has functional refineries both in Lagos and Port Harcourt, the price of fuel is sold at the rate of N1,040.

“It is obvious that the current administration is generating revenue at all costs.

“The price of the fuel will keep increasing even if the country has 10 functional refineries unless the government considers the masses and breaks the total dependency of government revenue on crude oil,” he said.

Another respondent, Augustine Oyiwona, attributed the high cost of fuel despite having two functional refineries to inflation, cost of crude, production cost, transportation and distribution cost, competition, as well as the nature of Nigeria’s road.

“Fuel price is almost twice as high now that we have two refineries working because fuel prices are influenced by many factors, including Inflation.

“Nigeria’s current inflation rate is 33.8%, which generally affects the purchase of raw materials and other production inputs.

“Another factor is the cost of crude, which is an international commodity and priced in dollars which puts pressure on our local currency.

“Then businesses in Nigeria rely on generators because the country can’t supply enough electricity.

“Manufacturers spend 40% of their production costs on generating energy which is also applicable to Dangote and the refurbished Port Harcourt refinery,” he stated.

According to another respondent, Sylvester Agih, “With respect to the hike in the fuel price despite the existence of two refineries in the country, one side of the argument is that with the removal of subsidy, what Nigerians are paying is the actual cost of the product.

“The other side of the argument is that since we have our own functioning refineries, Nigerians ought not to be paying as much as N1000 for a liter of fuel, especially as costs of importation, including import duties no longer apply.

“There may be other perspectives on the issue but the fact is that it negates common sense that Nigerians who have been paying less when the country was importing fuel are now constrained to pay more even with two functioning refineries.

“Sadly, the government cannot point to any project it has executed with the funds saved from the removal of the fuel subsidy.

“Similarly, the government cannot, in sincerity, claim that the life of the ordinary citizen has been improved following the removal of the fuel subsidy.

“This is why I don’t blame many who have accused the government of corruption and have called for the reversal of the removal of fuel subsidy,” he concluded.

Also speaking, Ameh Anthony expressed his disappointment over what he called suffering in the midst of abundant resources, saying the hardship Nigerians are going through resulting from high cost of petrol is uncalled for.

“Imagine, we have two refineries that are functioning. In other words, petrol is supposed to be very cheap for us, but the reverse is the case.

“We are even suffering more than when we imported refined fuel. Who did this to us?” He asked.

According to him, the surge in fuel price does not affect not just individuals but also businesses, which has led to increased costs of goods and services, worsening economic hardship on ordinary Nigerians.

Another respondent, Daniel Mustapha, called for a probe into the reason behind the development.

According to him, encouraging the government and refinery operators to improve efficiency, reduce waste, and increase production to meet local demand were the solutions to put an end to the era of continuous hike in petrol price.

“These things need to be investigated and appropriate action taken, otherwise, the hike in price would continue unabated and by extension increasing hardship in the country.

“Once the price of fuel is high, it affects every facet of the economy, including those that sell vegetables.

“Our government should be interested in exploring solutions to reduce petrol costs, such as increasing refinery production, improving efficiency, or implementing price control mechanisms.

“The government and refinery operators should provide clear explanations for the high petrol costs and permanently end these things that are suffocating ordinary Nigerians,” he stated.

On his part, Adams Ali urged the federal government to sell crude oil to the two refineries at the rate where pump price of petrol could be sold at affordable rate and by extension, reduce the burden of hardship on Nigerians.

“There is not much story on this. If Mr. President wants us to buy fuel at N300 in Nigeria, it is very possible.

“We own the crude oil. The Federal Government can sell crude oil to Dangote and Port Harcourt refineries in such a way that they can sell fuel at the rate of N300.

“The government should also block all the loopholes in the oil sector and then face mineral resources like gold and others.

“If fuel price and the cost of clearing imported goods from Customs are cut down, the price of things will come down,” he added.