Nigeria’s petroleum retailers have urged the federal government to revive the country’s state-owned refineries, warning that Dangote Petroleum Refinery’s decision to price fuel in U.S. dollars has exposed the risks of relying on a single major supplier.
The Petroleum Products Retail Outlets Owners Association of Nigeria said dollar-denominated sales could increase foreign exchange pressure on marketers, whose revenues are largely earned in naira, and make pump prices more vulnerable to exchange-rate fluctuations.
PETROAN President Billy Gillis-Harry said the government should restore full commercial operations at the Port Harcourt, Warri and Kaduna refineries to create competition and strengthen Nigeria’s energy security.
“Markets built around a single dominant supplier are markets built on borrowed stability,” Gillis-Harry said.
PETROAN said it supports the deregulation of Nigeria’s downstream petroleum sector and recognised Dangote Refinery’s right to make commercial pricing decisions. However, it argued that the shift to dollar pricing demonstrated how the domestic market had become increasingly dependent on one company’s supply and exchange-rate calculations.
The association said operational state-owned refineries would provide an alternative source of supply, create a pricing benchmark and reduce the ability of any single producer to determine market conditions. It also called for adequate crude oil allocations to all domestic refiners and policies supporting investment in modular and conventional refineries.
Dangote Refinery began pricing petroleum products for local buyers in dollars this week, setting the ex-depot price of petrol at $0.779 per litre. Diesel was priced at $1.087 per litre, while aviation fuel was set at $0.942 per litre. The refinery said the change was prompted by difficulties obtaining sufficient Nigerian crude under the government’s naira-for-crude programme, alongside rising international oil prices.
