CEO of Pinnacle Oil Explains Why Dangote Refinery Will Not Lower Fuel Prices in Nigeria

While many Nigerians are hoping for a decrease in fuel prices to alleviate their financial struggles, Robert Dickerman, CEO of Pinnacle Oil and Gas Limited, has stated that Dangote’s oil production will not significantly reduce these prices.continue Reading>>>

Dickerman attributed the rise in fuel costs in Nigeria to the devaluation of the naira in the global market. He made these remarks during the annual strategic international conference of the Association of Energy Correspondents of Nigeria (NAEC) held in Lagos.

He explained that all crude oil and petroleum products are priced in U.S. dollars globally, a standard that has been in place since oil was first drilled in Pennsylvania in 1859.

“When we import products, regardless of whether the buyer is a private marketer or NTL, we must pay the global market price, which is adjusted based on quality and location.

This price is in dollars and must be settled in that currency. When it is resold in naira—whether by vessel, in bulk at a terminal, by truck at a gantry, or at a retail pump—the market price is based on the dollar value converted to naira at the current foreign exchange rate, which is approximately N1700.Dickerman pointed out that any price lower than this reflects a subsidy in Nigeria. He explained that this subsidy is the difference between the market price and the retail selling price.continue Reading>>>

He also noted that as the naira declines in value, the costs of imported goods, including gasoline, manufactured products, and food, increase. “We need to tackle the fundamental issue, which is restoring global confidence in Nigeria’s economy and currency, attracting foreign investments, generating jobs, boosting local production, increasing tax revenues, and practicing fiscal responsibility. Only then can we lower the prices of petroleum products in naira.”

Regarding fuel subsidies, Dickerman mentioned that the government is still subsidizing Premium Motor Spirit (PMS) by providing discounted foreign exchange through the Nigerian National Petroleum Company Limited (NNPCL). He added, “Current prices at both wholesale and retail remain significantly below the market value. This is why only NTL has been able to import fuel (buying high and selling low) and why only they can purchase gasoline from Dangote and pay the market price while still reselling at a subsidized rate. No other marketer can sustain a business by trying to replicate this model.”continue Reading>>>

Dickerman highlighted that available crude oil from NNPC has been steadily declining due to production issues and measures taken to raise short-term cash, such as crude forward sales and using crude as collateral for international loans. He also noted that government fiscal constraints, increasing debt, and the necessity to fund large subsidies, such as for PMS and electricity, contribute to this decline.