The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has said the price of petrol should be more than N280 per litre, the rate at which Automotive Gas Oil, also known as diesel, is being sold.
According to Kyari, Nigeria remains the only country in the world where the price of diesel outweighs that of petrol.
He made this known on Tuesday, during a programme on Channels Television.
Kyari cited the activities of smugglers who take petrol from the country as an impediment to the country’s oil sector.
The NNPC boss said even though petrol evacuation by NNPC in Nigeria is currently about 60 million litres daily, the corporation is certain that consumption is not up to that volume.
He blamed smuggling for the huge consumption volume, describing the low petrol price of N162/litre as also an incentive for this.
He, however, said it would not prompt another closure of the borders, noting that the government had intensified efforts at curbing smuggling.
Kyari said, “Today we are paying N162/litre (for petrol). I am sure many people buy AGO (diesel) in the market and it is selling at N280/litre in the market today.
“So (there is) nowhere in the world diesel sells more expensive than PMS. That means that the price of petrol anywhere in the world, assuming you are going to sell it at the market, you are going to sell it above that price you have seen.
“Today, from what I can remember, I checked the number two days ago; what would we sell if we are at the filling station today and recover our cost fully is around N256/litre.”
Kyari said the deliberations between the government and the organised labour on petrol price had not been concluded and could drag beyond next July.
He said negotiations on the cost of petrol would have to be concluded to enable the government to effect a change in the cost of the commodity.
While answering questions on NNPC's proposed acquisition of a 20 per cent stake in Dangote refinery, Kyari said the corporation was borrowing to buy the stake in the refinery because the refinery business is viable and sustainable.
The NNPC had announced in May that it was in advanced talks with Dangote Industries to acquire a 20 per cent stake in the 650,000 bpd refinery.
Kyari said government money would not be used for the stake acquisition.
He said, “We are borrowing on the back of the cash flow of this business. We know that this business is viable, it will work and it will return dividends.
"It has a cash flow that is sustainable because refinery business, in the short term, will continue to be sustainable. That’s why banks have come forward to lend to us, so we can take equity in this.
"There is no resource-dependent country that will watch a business of this scale, which is bordering on energy security and has implications for fiscal security of the country, and you don’t have a say. And for us, as a strategy, we started this process long before Dangote started his refinery project.”
According to Kyari, the NNPC takes equity in very significant businesses that are anchored on the oil and gas operations: fertiliser, methanol plants, modular refineries and others.
He said the Dangote refinery would start production by 2022, adding that it would deliver over 50 million litres of petrol into the Nigerian markets.
He said, “We are also working on our refineries, to ensure that we fix them. We have awarded the contract for Port Harcourt refinery rehabilitation. And ultimately we are going to close that of Warri and Kaduna very soon in July so that all of them will work contemporaneously.
"The net effect is that you are going to have an environment where Nigeria becomes the hub of petroleum products and supply. It’s going to change the dynamics of petroleum supply globally in the sense that the flow is coming from Europe today and it is going to be reversed to some other direction.”
He added, “So the meaning of this is, there is an opportunity that has been thrown at us. And I’m not sure Mr Dangote wants to sell his equity in the refinery.
"I can confirm that it was at our instance that we started this engagement. He did not want to sell his shares in this refinery.”