Crude oil refiners and other stakeholders in Nigeria’s downstream sector have pointed to dollar-based charges on locally refined Premium Motor Spirit (PMS), coupled with the cost of importing crude, as key contributors to the high price of locally produced petrol compared to imported variants.
Recent data from the Major Energies Marketers Association of Nigeria (MEMAN) revealed that, as of December 5, 2024, the cost of landing a litre of imported petrol in the country was N958.89. In contrast, petrol produced by the Dangote Petroleum Refinery was priced at N970 per litre, while the Port Harcourt Refining Company’s output was reported to cost N1,030 per litre. This price discrepancy has raised concerns among industry operators, who argue that the dollar charges on PMS and crude oil importation are major factors behind the higher costs of domestically refined petrol.
The Crude Oil Refinery Owners Association of Nigeria (CORAN) highlighted that many of the charges imposed on locally refined products remain dollar-denominated, exacerbating the cost burden. The Publicity Secretary of CORAN, Eche Idoko, emphasized that jetty charges and other fees, still paid in dollars, are a significant challenge for local refineries, noting their negative impact on the sector’s competitiveness.
“We are facing difficulties due to the continued use of dollars for domestically consumed commodities, especially within the downstream sector,” Idoko said. He further called on the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Ports Authority (NPA) to transition to charging in naira, in line with recent government policies aimed at reducing the reliance on foreign currency.
The ongoing dollarization of charges has been a point of contention for oil marketers for some time. In March, MEMAN expressed concerns over the impact of dollar-based fees from agencies like NIMASA and NPA on the supply and distribution of petroleum products, citing an additional $10 per metric tonne charge imposed by these agencies. The high cost of these charges is ultimately passed on to consumers, resulting in higher pump prices.
As the Dangote refinery begins operations, industry players have renewed calls for a shift away from dollar charges. While some agencies have reportedly complied with the government’s directive, there is widespread concern that key costs, such as pipeline and jetty fees, continue to drive up the price of locally refined petrol.
“We need to ensure that all charges, including those by agencies like NIMASA and NPA, are settled in naira to reduce the cost of petrol,” said Hammed Fashola, National Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN).
Despite these challenges, there are indications that the government is making efforts to align with its directive that crude be sold to local refineries in naira. However, stakeholders like Ukadike Chinedu, National Publicity Secretary of IPMAN, argue that all involved agencies should comply with this policy and convert their charges to naira, in alignment with the presidential directive.
“The President has ordered that crude be sold in naira, so any agency still collecting fees in dollars is acting contrary to that directive,” Chinedu asserted, although he acknowledged that international vessel charges, including jetty fees, remain in dollars due to global standards.
As the debate continues, the industry is calling for a comprehensive review of these charges to help bring down the cost of locally refined petrol and enhance the competitiveness of Nigeria’s downstream sector.
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