Oil has been Nigeria's major source of revenue for many years; at a current price of $65 per barrel, Nigerian crude oil exports is said to record 2.2 million barrels per day
Mele Kyari, general managing director (GMD) of the Nigerian National Petroleum Corporation (NNPC), says local refineries will sell petrol based on international pricing.
He said this during an interview with Channels Television on Monday.
Kyari explained that Nigeria cannot produce locally and at the same time fix local prices.
“Everything on petroleum pricing is anchored on international pricing structure because you have to buy the crude, refinery parts are international, and pricing for the petroleum products and other by-products itself are all international,” Kyari said.
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“You have to benchmark it (pricing) against the global standards, because you have to recover your cost and there must be refinery margin, and products exported will be placed according to international pricing.
“The local component will be 10 to 20 percent of the value of the premium motor spirit (PMS) you see in the market.
“It is very good to produce locally but we have exaggerated the impact of local refineries as the basis for pricing.”
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The GMD further explained that even with the local refineries, Nigeria will still spend money, but less, on transportation.
“You cut some components of the cost of PMS, to be specific, first, there is no need for importation of petroleum products into the country, so freight elements–which costs about N15 to N17 per litre; taxes that are associated with transportation from other countries, are taken off.
“When this cost is eliminated, it reduces the burden on customers or consumers. When you refine locally, there is still cost of transportation but this will be around N3 or N4.”
He explained that every year, against past practices, NNPC have a saving of over a billion dollars for every import it carries out on a annual basis.
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He also said with the presence of local refineries such as modular refineries and the Dangote refinery, Nigeria will be a net exporter of petroleum in the next three years maximum.
The 650,000 barrels per day Dangote refinery is expected to be completed later this year and start production in the first quarter of 2022.
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