…By Dorcas Funmi for TDPel Media. The Nigerian National Petroleum Company Limited (NNPCL) has clarified that the local production of Premium Motor Spirit (petrol) will not lead to a decrease in its price.
Speculations arose suggesting that the newly inaugurated Dangote Refinery, set to commence operations in July, would result in a reduction of petrol prices.
However, the NNPCL’s Group Chief Executive Officer, Mele Kyari, has dismissed this notion, stating that the cost of fuel will remain unaffected despite increased local production.
False Expectations of Reduced Prices:
During an interview on Arise television in Abuja, Kyari addressed the misconception that domestic production would lead to lower petrol prices.
He emphasized that even with the anticipated boost in local production from the Dangote Refinery and the upcoming completion of the Port Harcourt Refinery, the cost of fuel cannot be expected to decrease.
Cost Implications of Local Production:
Kyari explained that when the product is processed locally, the refineries factor in the cost of production and other expenses, resulting in the fuel being sold at the current price.
He made it clear that local production does not eliminate the need for subsidies, as there are no financial resources available to support ongoing subsidy programs.
No Subsidy and Cost Recovery:
With the commencement of local production, Kyari emphasized that there will be no subsidy as the country lacks the necessary funds to sustain such programs.
The cost of production and distribution will be recovered from the market price of petrol without any government-backed subsidy.
Conclusion:
The Nigerian National Petroleum Company Limited has clarified that the local production of petrol will not lead to a reduction in its price.
Despite the expected increase in production from the Dangote Refinery and the upcoming completion of the Port Harcourt Refinery, the cost of fuel will remain unchanged.
The refineries will incorporate the cost of production and other expenses, resulting in the continued sale of petrol at the current price.
Additionally, the country no longer has the resources to support subsidy programs, thus eliminating the possibility of subsidies when local production begins.