The roughly N6.2tn yearly fuel import bill of the Federal Government will be significantly slashed if the Dangote Petroleum Refinery begins the sale of premium motor spirit in June as promised by the Chairman of the Dangote Group, Aliko Dangote.
It would be recalled that Dangote said at the Africa CEO Forum in Kigali, Rwanda on Friday, May 17, that following the laid-down plans of the Dangote refinery, Nigeria would no longer need to import petrol starting next month.
The country’s petrol import was reduced to an average of one billion litres monthly after President Bola Tinubu removed fuel subsidy on May 29 last year, according to a report by the National Bureau of Statistics.
According to Dangote, the $20bn refinery can meet West Africa’s petrol and diesel needs, as well as the continent’s aviation fuel demand.
He said, “Right now, Nigeria has no cause to import anything apart from gasoline and by sometime in June, within the next four or five weeks, Nigeria shouldn’t import anything like gasoline; not one drop of a litre.
“We have enough gasoline to give to at least the entire West Africa, diesel to give to West Africa and Central Africa. We have enough aviation fuel to give to the entire continent and also export some to Brazil and Mexico.
“We have started producing jet fuel, we are producing diesel, and by next month, we’ll be producing gasoline. What that will do is it will be able to take most African crudes.”
The Punch reported that the assurance by Dangote, if realised, would reduce the country’s approximately N6.2tn annual spending on PMS import.
With an average pump price of N670/litre, marketers put the average landing cost of petrol currently at N520/litre, considering the price of the Nigerian National Petroleum Company Limited, which is the only importer of the product.
Operators also put the average difference between the landing cost and pump price of PMS at N150/litre.
With an average monthly consumption of 1 billion litres, Nigeria currently spends approximately N520bn on the importation of PMS every month. This is N6.2tn annually.
Going by the planned June supply of PMS by Dangote, the country is expected to save a substantial amount from the elimination of shipping and other charges attached to importation, according to operators and industry experts.
The difference between the landing cost and the pump price of petrol is N150 per litre, according to operators.
Landing cost is the total cost of delivering the shipment to Nigeria from a foreign country, including all expenses incurred from the point of production to the point of delivery.
Refined petroleum products often arrive in the country via the Atlas Cove, from where it is transferred to jetties via daughter vessels. From jetties, the fuel is moved to various tanks.
Marketers say this difference of N150 between the landing cost and the pump price has to do with the cost of moving PMS from the port to various filling stations across the country. This also includes marine costs, and the Nigerian Ports Authority charges, among others.
The PMS landing cost is different from that of diesel, aviation fuel, and other petroleum products.
In foreign currency, the country spends an average of $4.16bn annually, which comes to N6.2tn if converted at the rate of N1,520 per dollar.
However, there are arguments that the NNPCL spends more than this on PMS importation.
Analysts believe that not less than one-third of the country’s annual foreign exchange expenditure goes into fuel imports.
A reliable source at the Central Bank of Nigeria said that the anticipated commencement of fuel supply by the Dangote refinery in June would herald a positive shift in the nation’s economy.
According to the source, the move to halt fuel imports will lead to a substantial reduction in the demand for foreign exchange, thereby strengthening Nigeria’s economic position.
Dangote refinery, which is the largest in Africa and Europe when it reaches full capacity, has since commenced the sale of diesel and aviation, but its petrol is yet to hit the market.
In April, Dangote crashed the price of diesel from around N1,500 to N1,000 per litre.
But Nigerians are currently eagerly waiting for petrol, which is the major fuel used by transporters, small-scale businesses and individuals for alternative power generation.
