The Nigerian National Petroleum Company Limited (NNPCL) has called for prompt completion of Nigeria’s refineries as it projected an annual savings of N367 billion when completed.
In his explanation, the Group Chief Executive Officer of NNPC, Mele Kyari, stated that locally refining crude oil into Premium Motor Spirit (PMS) popularly called Petrol would reduce the logistics cost of its supply by N17 per litre.
Investors King gathered that NNPC distributes over 60 million litres of petrol daily to oil marketers in the country. With a N17 per litre deduction, Nigeria will save N1.02 billion daily and N367 billion yearly.
Oil Marketers, having estimated the gains called on the Dangote Refinery management and the Federal Government, through NNPC to hasten up work on Nigeria’s refineries for commencement of local PMS production.
Kyari, being interviewed on a Television programme assured that work has been intensified to get the Port Harcourt and Warri refineries completed before the first half of this year end.
The NNPC Boss, however, noted that when the refining is done locally and petrol is produced, significant reduction in price of petrol might not follow.
His words, “this understanding that once you start local refining prices will crash, this is not so. It is very unlikely to play out that way, because firstly, crude oil will continue to be the major feedstock for every refinery. 70 per cent of your operation cost always come from crude, as your feedstock, and this is priced at the international market.
“However, two things will change when we start local refining. It gives you security of supply. Now, when you place an order, it takes you 14 days to get these (petroleum) products from Europe into our country and that can be a matter of concern. Any glitch with weather, war situation, or something happens, you’ll run into trouble, but once you’re producing locally, the products become very close to you and the issue of energy security becomes much more assured.
“Secondly, the in-country refining of crude reduces the logistics cost, because for you to move products from Europe to Nigeria, probably it is going to cost you about N21/litre today. But when you bring it closer home, you are probably going to need N7 or N8/litre to move it from one location, all things being equal.”