The Senior Special Assistant to President Bola Tinubu on Public Affairs, Ajuri Ngelale, has said that Nigeria spends about $10 billion a year on foreign exchange earnings to the refiners and partners to get crude refined to fuel. He also said during an interview on TVC News, said that more refineries in Nigeria would not lead to lower fuel prices. He stated that people often say that if Nigeria’s refineries were working, fuel pump prices would be cheap.
He, however, added that nothing could be farther from the truth. Ngelale said: “That is a myth, it does not happen anywhere in the world, even if we had the most refineries producing the most PMS in the world, you would find that the most prolific PMS producers with their refineries do not charge different from the countries without refineries. I am not saying that we should not have refineries, but there are benefits to having working refineries. “This is why phase one of our Port Harcourt Refinery is coming on stream in December 2023 and phase two by the end of 2024. Dangote Refinery is already up and is going to start dishing out products very soon. “BUA 200,000 bpd refinery is coming up in Akwa Ibom, we are going to have an excess supply that we can export internationally.
“The point I am making on this is that the reason why the price at the pump will not go down irrespective of what our refining capacity is as a country is that nobody spends tens of billions of dollars on building a refinery because of charity or corporate social responsibility, they do it to make money.” He added: “So that is why you find that no matter how many oil marketers you have, bringing the product into the country, no matter how many refineries you have producing mass amount of PMS (fuel), the price is dependent on an international benchmark of what the crude oil per barrel is. What the cost is. When the oil prices are high, the prices of the pump will go up and when the oil prices go down, the prices of the pump will go down.
“These are market fundamentals that are determined, not in one country but on the international stage. The benefit of having refineries in the country is not that you will have cheap fuel. No. The benefit is that you would have saved the country millions of dollars in transportation and logistics costs that we are spending on an annual basis of having to put refined PMS from an international refinery on the water to come to Nigeria’s shores we will have to offload and send to our distribution centres. You save that money.
“In addition to that, you save about $10bn per year on foreign exchange earnings that we are having to pay out to our refiners and partners to get that product exchanged from crude to refined PMS. We saved all that money within the Central Bank as a result of having a local refinery. So there are benefits, big benefits but one of them is not having cheap fuel.