While Nigerians are hoping for lower fuel prices to ease their hardship, Robert Dickerman, CEO of Pinnacle Oil and Gas Limited, said Dangote’s oil production would see lower prices. He said there would be no significant reduction.
Robert Dickerman, Chief Executive Officer, Pinnacle Oil & Gas Limited
According to Dickerman, the root cause of fuel price hikes in Nigeria is the devaluation of the naira in global markets.
He was speaking at the Annual Strategic International Conference of the Nigeria Association of Energy Correspondents (NAEC) in Lagos.
The oil tycoon pointed out that since oil was first drilled in Pennsylvania in 1859, all crude oil and petroleum products around the world have been priced in US dollars (USD).
“When you import a product, whether the buyer is an NTL or a private seller, you must pay the world market price, adjusted for quality and location. That price is expressed in dollars and , must be paid in US dollars when resold in naira by ship, in bulk at a terminal, by truck at a gantry or at the pump at a retail outlet, the market price is in US dollars converted to naira at the current foreign exchange rate. The price is about N1700.
“Any price below that is the result of subsidy in Nigeria. Subsidy represents the difference between the market price and the selling price,” he explained.
Mr. Dickerman said that every time the naira falls, the price of everything imported and market-priced increases, including petrol, industrial products and food.
“We will restore global confidence in Nigeria’s economy and currency, create jobs and foreign investment in local production, increase tax revenues and address the fundamental questions of how to achieve fiscal health. That is the only way to bring down the Naira price of petroleum products.”
On the current status of fuel subsidy, the CEO noted that Premium Motor Spirit (PMS) still receives subsidies from the government through the Nigerian National Petroleum Corporation (NNPCL) using discount exchange rates.
He said, “Wholesale and retail prices are still well below the market. This is why only NTL can import (buy high and sell low) and only NTL can buy Dangote petrol and beat the market price. That’s why you can pay and resell at subsidized prices. No marketer will stay in business trying to copy this model.
“The crude oil available for sale by NNPC has been steadily declining due to production challenges and measures taken to raise short-term cash such as crude oil futures sales and collateralized crude oil for international loans; Government fiscal constraints, increasing debt and the need to finance large subsidies such as PMS and electricity.”
