The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has said the average pump price of petrol in Nigeria remains lower than what consumers pay in the United States and some other African countries.
Lokpobiri made the assertion on Channels Television’s Politics Today on Tuesday while defending the Federal Government’s decision to deregulate the downstream petroleum sector.
His comments came amid renewed discussions over petrol prices following recent reductions in depot prices by the Dangote Petroleum Refinery and other oil marketers.
The minister said available price comparisons showed that petrol remained relatively cheaper in Nigeria despite the removal of subsidy.
He said, “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.”
Lokpobiri also dismissed the argument that Nigeria’s status as an oil-producing country and the presence of the Dangote Refinery should automatically translate into cheaper petrol.
According to him, the United States, despite being the world’s largest oil and gas producer with substantial refining capacity, still sells petrol at a higher average price than Nigeria.
He said, “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.”
The minister argued that deregulation had opened the sector to greater private-sector participation and made it possible for major investments such as the Dangote Refinery to operate in a competitive market.
He said, “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.”
Lokpobiri maintained that the policy was designed to allow private businesses to invest and expand activities across Nigeria’s oil and gas value chain.
He added, “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.”
On the removal of petrol subsidy, the minister said the funds previously spent on subsidy were now available for distribution to the Federal Government, states and local governments through the Federation Account Allocation Committee.
He said, “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 further argued that fluctuations in energy prices were not peculiar to Nigeria, noting that crude oil and petroleum products were traded in a global market.
He said, “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.”
The minister said the Federal Government had no plans to reverse the deregulation policy, stressing that doing so could discourage investment in the sector.
He also pointed to the Dangote Refinery’s supply of aviation fuel and developments in Nigeria’s foreign reserves as some of the benefits associated with the reforms.
Lokpobiri further said the Central Bank of Nigeria had indicated that the oil and gas sector accounted for 85 per cent of the country’s foreign reserves.
