The minister of state for petroleum resources (Oil), Heineken Lokpobiri, on Tuesday, September 22, said the average price of petrol in Nigeria remains lower than in the United States (US) and some African countries despite the removal of subsidy.
Lokpobiri stated this while defending the federal government’s deregulation of the downstream petroleum sector amid concerns over high petrol prices.
His comments came as the Dangote Petroleum Refinery and other marketers began reducing their depot prices following a decline in international crude oil prices.
It was earlier reported that Dangote refinery cut its petrol depot price from N1,350 to N1,325 per litre, while other marketers also reduced their prices in Lagos, Port Harcourt, Calabar and Warri.
Despite the reductions, petrol was still selling at between N1,370 and N1,450 per litre in some locations.
Lokpobiri said petrol in Nigeria was cheaper than in the US, Cameroon, Ghana and South Africa.
“In the US, the average, you know, liter of fuel is N1,633. In Nigeria, it’s on average N1,430. If you go to Cameroon, it’s N1,959. If you go to Ghana, it’s N2,070. If you go to South Africa, it’s N2,070. So Nigeria’s average cost of fuel per litre is still lower than,” Lokpobiri said.
The minister argued that Nigeria’s status as an oil-producing country and the presence of the Dangote refinery did not automatically translate to lower petrol prices.
“As at today, the records available show that the USA is the highest producer of oil and gas in the world. The United States is the highest producer of oil and gas in the entire world. They also have the highest refining capacity, but the fuel price per liter is higher than that of Nigeria.
“So even though the Dangote refinery is here, that doesn’t mean that the fuel price will be lower because the Dangote refinery is available. But what is important is that the regulation has also created a new economy,” he said.
Lokpobiri said deregulation had encouraged private investment in the oil and gas sector, arguing that the Dangote refinery would not have been able to survive if the government had continued importing petrol and selling it below the market price.
“But for the policy of deregulation, Dangote refinery wouldn’t have been the most attractive Initial Public Offering (IPO) on the continent. If the government was continuously importing, as the Nigerian National Petroleum Company (NNPC) was doing, and selling at a lower price than the market price, Dangote wouldn’t have been able to survive,” he added.
He said deregulation was intended to create opportunities for private-sector investment in the midstream and downstream sectors.
“Deregulation all over the world is to enable private sector businesses to thrive and all the businesses that are associated with the oil and gas sector,” he said.
The minister also defended the removal of petrol subsidy, saying the savings were being distributed to the three tiers of government through the Federation Account Allocation Committee (FAAC).
“These days we get 2.1 trillion being shared. This is the first time it is happening. You’ll recall that before this government came, about 27 states had no capacity to pay even salaries. Today, states are doing gigantic projects. It’s because of the savings that we made from this subsidy.”
Lokpobiri said the impact of high energy prices was not peculiar to Nigeria, noting that consumers in the US and Europe were also affected.
“Oil and gas is a global commodity. What is sold in New York is what is also sold here. So, no matter what you may think, America, or Saudi Arabia, or anywhere in the world, energy prices will always be the same,” he said.
The minister said the government would not reverse the deregulation policy despite the pressure on consumers, arguing that the policy was necessary to encourage investment.
He also cited the Dangote refinery’s supply of aviation fuel and rising foreign reserves as evidence of gains from the oil and gas sector.
Lokpobiri further said the Central Bank of Nigeria (CBN) had recently stated that 85 per cent of Nigeria’s foreign reserves came from the oil and gas sector.
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