Why Dangote Refinery May Not Lead to Fuel Price Reduction in Nigeria – Pinnacle Oil CEO
Despite hopes that the Dangote Refinery will significantly reduce fuel prices in Nigeria, Robert Dickerman, CEO of Pinnacle Oil and Gas Limited, has cautioned that such expectations may be unrealistic. He attributes the persistent high cost of fuel to the devaluation of the naira, not merely the supply of refined products.
Speaking at the annual strategic international conference organized by the Association of Energy Correspondents of Nigeria (NAEC) in Lagos, Dickerman explained that the key issue driving fuel price hikes in Nigeria is the exchange rate, as global oil and petroleum products are priced in US dollars.
“Since the first oil drilling in Pennsylvania in 1859, crude oil and petroleum products have been traded in US dollars worldwide,” said Dickerman. “When we import products—whether the buyer is a national oil company or a private marketer—we pay the global market price, which is in dollars. That price is then converted to naira at the current exchange rate, which is currently around N1,700.”
He stressed that any reduction in the fuel price would only result from subsidies provided by the Nigerian government. “The subsidy represents the difference between the market price and the selling price,” Dickerman noted.
The CEO further explained that as the naira devalues, the cost of imported goods, including fuel, continues to rise. He called for solutions to address Nigeria’s broader economic challenges, including currency stabilization, attracting foreign investments, and fostering local production.
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“We need to focus on restoring global confidence in Nigeria’s economy, creating jobs, and boosting local production. These are the only sustainable ways to lower the price of petroleum products in naira,” he added.
Dickerman also addressed the ongoing fuel subsidy situation, pointing out that Premium Motor Spirit (PMS) remains subsidized through discounted foreign exchange provided by the Nigerian National Petroleum Company Limited (NNPCL).
He highlighted the challenges faced by private marketers in importing fuel at market prices, as well as the declining availability of crude for sale by NNPCL due to production challenges, fiscal constraints, and international loan obligations.
Source: NAEC
