Hopes of possible reduction of pump price of fuel when Dangote Refinery kicks off production were dashed on Monday as Federal Government disclosed that it will sell at international price.
The Minister of finance, Zainab Ahmed, explained that by virtue of location of the refinery at the Export Processing Zone in Lagos State, it is bound to sell at international price and will not in any way bring down local prices.
The Federal Government had of recent increased the pump price of fuel to N160 per litre part of deregulation of the oil and gas sector and as a result of removal of oil subsidy.
The minister, who spoke while featuring in NTA’s ‘Good Morning Nigeria’ programme Monday, said: “What we are doing is enabling the petroleum sector to actually grow. There have been a number of refineries that have been licensed for several years. None of them was willing to start refining under the regime that we had were fuel was controlled.
“The Dangote refinery is sitting within an Export Processing Zone so they are insulated from that. When we buy fuel from Dangote, we will be buying fuel at the international market price. The only savings that we will be making is the savings of freight which is shipping.
“But we will still have landing cost; labour cost and the marketers will still have to put a margin. These refineries being those that are supposed to have come to operate can now come in because they are assured that when they produce, they can sell at market rate and recover their investments and make some reasonable profits.
“It will mean more refineries will open, they will employ people and fuel will be available in different parts of the country and not just relying on the government refineries.
“Those refineries are old and even if we turn them around, we will not be able to operate them at optimal capacity, so while the NNPC is trying to rehabilitate them, we also need to encourage the private sector refineries to come on stream and even state governments that have the capacity.”