The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has defended the Federal Government’s decision to deregulate the downstream petroleum sector, insisting that the average price of petrol in Nigeria remains lower than in the United States and some African countries.
Lokpobiri made the statement on Channels Television’s Politics Today on Tuesday while responding to concerns over the high cost of petrol following the removal of subsidy.
His comments came shortly after the Dangote Petroleum Refinery and other marketers reduced their depot prices following a decline in international crude oil prices.
The PUNCH reported on Wednesday that Dangote Refinery reduced its petrol depot price from N1,350 to N1,325 per litre. Other marketers also announced price reductions in Lagos, Port Harcourt, Calabar and Warri.
However, petrol continued to sell for between N1,370 and N1,450 per litre in some locations.
Speaking on the programme, Lokpobiri compared petrol prices in Nigeria with those in other countries, saying Nigerians were paying less than consumers in the United States, Cameroon, Ghana and South Africa.
“In the US, the average, you know, liter of fuel is N1,633. In Nigeria, it’s on the average of 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,” he said.
The minister also dismissed the argument that Nigeria’s status as an oil-producing nation and the presence of the Dangote Refinery should automatically result in cheaper petrol.
He noted that the United States, despite being the world’s largest producer of oil and gas and having substantial refining capacity, still records a higher petrol price than Nigeria.
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“As at today, the records available show that 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 despite the fact that Dangote Refinery is here, that doesn’t mean that the fuel price will be lower because Dangote Refinery is available. But what is important is that the regulation has also created a new economy.”
Lokpobiri argued that deregulation had helped attract private investment into the petroleum industry, particularly in the midstream and downstream segments.
According to him, the Dangote Refinery would have faced difficulties competing in the market if the government had continued importing petrol and selling it below the prevailing market price.
“But for the policy of deregulation, Dangote Refinery wouldn’t have been the most attractive IPO in the continent. If government was continuously importing, as NNPC was doing, and selling at a lower price than the market price, Dangote wouldn’t have been able to survive.”
He added that deregulation was intended to create room for private businesses to operate and expand across the oil and gas value chain.
“Deregulation all over the world is to enable private sector businesses to thrive and all the businesses that are associated with with the oil and gas sector.”
The minister also defended the removal of petrol subsidy, saying the savings generated from the policy were now being shared among the three tiers of government through the Federation Account Allocation Committee.
“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 maintained that the pressure created by energy prices was not unique to Nigeria, noting that crude oil and gas are globally traded commodities.
“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 Federal Government would not reverse the deregulation policy despite concerns over the impact of petrol prices on consumers, insisting that the policy was necessary to encourage further investment in the sector.
Lokpobiri also pointed to the Dangote Refinery’s supply of aviation fuel and the rise in Nigeria’s foreign reserves as some of the developments he said showed progress in the oil and gas industry.
He further claimed that the Central Bank of Nigeria had recently stated that 85 per cent of Nigeria’s foreign reserves came from the oil and gas sector.