|
Listen to article
|
The highly anticipated Dangote Refinery in Lagos is expected to be a major player in Nigeria’s petroleum market. However, Henry Adigun, an expert in the field, cautions that the refinery’s dollar-based production costs may affect its ability to offer competitive pricing, which could impact its market strategy.
Henry Adigun recently shared his insights on the oil and gas industry as a guest on Channels Television’s socio-political program, Inside Sources with Laolu Akande. During the Friday broadcast, Adigun discussed the challenges facing the Dangote Refinery, including production costs tied to the US dollar.
According to Henry Adigun, the petrol produced at the Dangote Refinery is of exceptional quality, rivalling the best in the world. He noted that the higher quality of the petrol comes with a corresponding increase in price, suggesting that the refinery’s premium product may come at a premium cost.
Adigun notes that the Dangote Refinery’s petrol is the best globally, and its exceptional quality commands a higher price.
Adigun said, “He (Dangote) has cost. The crude is given to him at a cost. He only gets 40% of the crude from NNPC, and spends money to buy the remaining from America and co. It’s a single-train refinery, you can’t use only one crude to produce all products. This is technical in a way.
“So, you have to blend American crude with Nigerian. That’s why, if Nigeria gives him all the barrels, he still has to import and blend them. People should not forget that.
“And I keep telling everybody, the man (Dangote) did not take the loan in naira; he took it in dollars and he has to pay the loans back in dollars.”
Read also: Soaring Fuel Price: NNPCL Limits Sales To Private Marketers
In response to a question about Dangote’s potential to sell petrol at N700 per pump, the expert stated that it was not possible. He had analyzed the refinery’s financials and presented his conclusions to Dangote’s people, asserting that the selling price would be no less than N850, taking into account the costs associated with retail sales.
In a nation where energy demands are skyrocketing, Nigeria finds itself ensnared in a vicious cycle of dependency. With its state-owned refineries gathering dust, the country is compelled to import a staggering volume of refined petroleum products.
The NNPCL, a state-run colossus, has assumed the role of chief importer, highlighting the tenuous nature of Nigeria’s energy security.
