Petroleum minister says market-driven pricing is critical to attracting investment and sustaining private-sector participation….
The Federal Government has again defended the deregulation of Nigeria’s downstream petroleum sector, with the Minister of State for Petroleum Resources, Oil, Heineken Lokpobiri, arguing that petrol prices in the country remain below those recorded in the United States and several African countries.
Lokpobiri spoke on Tuesday against the backdrop of continuing concerns over the cost of petrol since the removal of the fuel subsidy.
His comments also came as petrol prices at the depot level continued to ease following a decline in international crude oil prices, with the Dangote Petroleum Refinery and other marketers announcing fresh reductions.
The Dangote refinery recently cut its depot price for petrol from 1,350 naira to 1,325 naira per litre, while other suppliers also lowered their prices in Lagos, Port Harcourt, Calabar and Warri.
The reductions, however, have yet to translate into uniform retail prices across the country, with petrol still selling for between 1,370 and 1,450 naira per litre in some locations.
In making the case for deregulation, Lokpobiri compared pump prices in Nigeria with those in other oil-producing and African countries.
He said petrol currently averages about 1,430 naira per litre in Nigeria, compared with approximately 1,633 naira in the United States, 1,959 naira in Cameroon and about 2,070 naira in both Ghana and South Africa.
The minister said being an oil-producing nation does not automatically mean that consumers must have access to cheaper petrol.
Using the United States as an example, Lokpobiri noted that the country is the world’s largest oil and gas producer and has significant refining capacity, yet petrol remains more expensive there than in Nigeria.
He also cautioned against assuming that the Dangote Refinery’s operations alone would automatically bring down pump prices.
According to the minister, the cost of crude oil on the international market and prevailing market conditions remain major factors in determining the final price of petroleum products.
Lokpobiri maintained that deregulation was designed to create a more attractive environment for private investment across Nigeria’s petroleum industry.
He argued that the Dangote Refinery, like other private operators, would have struggled to compete in a system where government-controlled imports were sold below their market value.
The minister said the policy was therefore intended to encourage greater participation by private businesses in the midstream and downstream sectors, while reducing the government’s direct involvement in determining fuel prices.
He also defended the decision to end petrol subsidies, saying the policy had freed up funds that were previously spent on keeping pump prices below market levels.
According to Lokpobiri, the resources saved are now shared among the federal, state and local governments through the Federation Account Allocation Committee.
He claimed that the increased allocations had strengthened the capacity of some state governments to meet salary obligations and finance major infrastructure projects.
The minister further argued that Nigeria’s experience with rising energy costs must be viewed within the context of a global petroleum market.
Oil and gas, he noted, are internationally traded commodities, meaning changes in global crude prices and other market conditions can affect the cost of petroleum products in different countries.
Despite pressure over the impact of higher petrol prices on households and businesses, Lokpobiri said the Federal Government was not considering a return to the previous regulated pricing system.
He maintained that sustaining deregulation was necessary to attract fresh investment and allow private operators to expand their activities across the oil and gas value chain.
Highlighting developments in the sector, the minister also pointed to the Dangote Refinery’s supply of aviation fuel and developments in Nigeria’s foreign reserves as signs of progress in the industry.
Lokpobiri added that the Central Bank of Nigeria had recently indicated that about 85 per cent of the country’s foreign reserves were generated from the oil and gas sector.
