Crude oil refiners and other players in the downstream sector have stated that the dollar charges on locally refined Premium Motor Spirit, popularly called petrol, coupled with the cost of importing crude are major reasons for the high cost of the product when compared to imported PMS.
Data obtained from the Major Energies Marketers Association of Nigeria on Tuesday showed that the cost of landing a litre of imported petrol into the country as of December 5, 2024, was N958.89.
The price of petrol produced by the Dangote Petroleum Refinery, according to dealers on Tuesday, was N970/litre. Oil marketers had also stated earlier that the price of refined petrol from Port Harcourt Refining Company was N1,030/litre.
This shows that the cost of locally refined petrol is higher than the price of imported PMS, a development that industry operators blamed on dollar charges on PMS and crude oil importation costs.
The Crude Oil Refinery Owners Association of Nigeria noted that some of the charges on locally refined products were still in dollars, stressing that this affects the cost of these commodities.
This is also as marketers called on the Nigerian Maritime Administration and Safety Agency to fix its charges in naira.
The Publicity Secretary of CORAN, Eche Idoko, regretted that jetty charges were still in dollars.
According to him, this is a major challenge to trade and businesses in the downstream sector.
“I know jetty charges are still in dollars and these are part of the issues we are having,” Idoko said of local refineries.
He added, “Receiving and charging fees for domestically consumed commodities in dollars is a major challenge to trade and businesses, especially within the downstream.”
He called on the Federal Government to stop charging in dollars while asking that the fees be reviewed to help reduce the cost of PMS locally.
Our correspondents report that the Nigerian Ports Authority and Nigerian Maritime Administration and Safety Agency have over the years fixed charges in dollars for operators in the petroleum sector.
In March, major oil marketers under the aegis of the Major Energies Marketers Association of Nigeria complained that the dollarisation of some charges by government agencies like NIMASA and others were affecting the supply and distribution of petroleum products.
MEMAN said marketers pay the government agencies about $10 per metric tonne, translating to a higher pump price with the current exchange rate.
As the Dangote refinery began operations, operators called for a change in these charges, though they commended some agencies for complying.
Other charges, which include pipeline fees, and jetty, among others, are said to be factors for the high cost of locally refined petrol.
“Pipeline, NIMASA, and jetty charges, among others are responsible for the high cost of Dangote petrol. The charges are in dollars. The government needs to do something about it,” an operator, who spoke in confidence due to lack of authorisation to speak on the matter, stated.
An official of the Dangote refinery, who pleaded anonymity because he was not permitted to address the press, confirmed the development, expressing hope that the agencies will charge in naira at rates that would not impact petrol pricing too much.
In an interview with our correspondent, the National Vice President of the Independent Petroleum Marketers Association of Nigeria, Hammed Fashola, said though he could not confirm whether the sundry charges were affecting Dangote pricing, he was worried about why the charges are still in dollars.
Fashola maintained that if companies like NIMASA and NPA continued to charge in dollars, the price of PMS and other refined products would remain high regardless of the crude being sold in naira.
“I think there are a lot of things to be straightened out in all those charges. I don’t think NIMASA and other agencies have already started charging in naira. I’m not sure. All those things are very key to pricing. They affect the price of the product at the end of the day; even those who will take the product from the vessel to their depots will still have to pay all those charges too.
“I cannot confirm to you that those official charges are now paid in naira. If the agencies are charging in hard currency, it will affect the price of Dangote petrol,” he stated.
Similarly, the National Publicity Secretary of the IPMAN, Ukadike Chinedu, said NIMASA and NPA should ensure that they convert any of their charges that are in dollars to naira.
He pointed out that the instruction of the President was that crude be sold to the Dangote refinery in naira and that the plant would in turn sell its products to the domestic market in the local currency.
Ukadike stressed that all agencies involved in the process should ensure that they comply with the instructions and accept naira for their charges instead of dollars.
“The President has given an express order that crude be sold in naira, so if any agency is still collecting charges in dollars, then such agency is not working in alignment with the presidential directive.
“However, jetty charges or what some people call vessel charges are in dollars, because vessel charges are international charges. Jetty charges are the same as vessel charges and they are in dollars, and only a presidential directive may alter this,” Ukadike stressed.
NIMASA reacts
An official of NIMASA told one of our correspondents that the charges were in dollars but efforts are ongoing to change them to naira.
The official confirmed that the agency is mapping out modalities to ensure Dangote and other players in the sector pay the naira equivalence of these charges.
Another source close to the agency explained that the Federal Government was working towards ensuring that the payments were done in naira.
“They are working on it. You know the President called a meeting with all the parties involved. Though they have not changed it they are seriously working on it. After they met with Dangote to change it. So I can assure you that they are working on it,” the official stated.
For decades, Nigeria depended on imported petroleum products following the failure of state-owned refineries. The 60,000 barrels per day capacity plant of the Port Harcourt refinery only resumed operations less than a month ago.
Crude imports
A major oil marketer further pointed out that the importation of crude by the Dangote refinery is another issue of concern as regards the price of locally produced petrol.
“Many things come into play when you talk about the issue of high prices for locally refined petroleum products. If you imported crude from the US and when it was imported the price was $80/barrel and the exchange rate was N1,600/$, then obviously, it will take the refinery time to deplete that crude stock.
“But the way people look at it is that if landed cost reduces today, by tomorrow morning we should see a reduced pump price. That is not necessarily so. Many things go into the pricing of petroleum products. It is a complex thing,” he stated.
Freedom of choice
The dealer stated that this is why oil marketers have decided to choose where to buy their refined products from.
“So what you see today, tomorrow it might be the opposite. It could be that local petrol is cheaper than imported, and vice versa. That is why we have constantly said there should be freedom of choice, because we as business people want to buy from what will give us maximum gain. We have to pay the banks and give our shareholders some earnings from their investments.”
