The issue of increased petrol pump price in Nigeria have been in the news for the past two weeks.
A controversy arose when NNPC announced that Dangote Refinery had sold petrol to it at N898 per litre, whereas Nigerians were buying petrol at that point in time, for N858.
The question on the lips of many Nigerians was how come DRL petrol price per litre was N40 above what NNPC was selling to Nigerians, though NNPC was importing ?
DRL vehemently denied that it’s price of petrol to NNPC was higher, yet it refused, quite funnily, to tell Nigerians at what price exactly it was selling petrol to NNPC.
Then, Alhaji Aliko Dangote, the President of DRL had an interview with Bloomberg on Monday, 23rd of September, 2024.
The President of DRL, in his reply to one of the questions thrown at him by the anchor of the interview, said that in Saudi Arabia, petrol costs more than what obtains in Nigeria.
He said specifically that the price of petrol per litre in Nigeria is 40% lower than what’s paid by Saudis in their Country, though Saudi Arabia is also an oil producing Country.
The question then is whether this assertion by Alhaji Dangote was true and whether comparisons can be made thereof between the two Countries, that is, Nigeria and Saudi Arabia in relation to pricing of crude oil derivative products.
First, an enquiry reveals that petrol per litre in Saudi Arabia goes for SAR 2.330 (SAR means Saudi Riyal) and with an exchange rate of N436 to SAR 1, the price of petrol in Saudi Arabia in Nigerian currency will be N1,015 Naira per litre.
So, deducting 40% from this will give us a price of about N600 Naira per litre of petrol from what Dangote was saying.
Definitely, what the President of DRL was saying, was that before his refinery came to increase the pump price of petrol to N950 in Lagos and above N1,000 Naira in other parts of Nigeria due to it’s price of N898 to NNPC, Nigerians were actually buying petrol at about 40% cheaper than what obtained in Saudi Arabia.
So, DRL has been able to help Nigerians buy petrol now, in some parts of the Country, at a pump price per litre, above what obtains in Saudi Arabia.
But, we need to look further at another price of a derivative obtained from crude oil. A derivative that’s also very important in Nigeria, especially as a live wire to some industries and that product is diesel.
We will want Alhaji Aliko Dangote to also relate the price of this product in Saudi Arabia to that of Nigeria as he did for petrol.
A litre of diesel in Saudi Arabia is sold for SAR 1.150, therefore using the same exchange rate of N436 Naira to SAR 1 Saudi Riyal, that is, N501 Naira per litre is what diesel is sold in Saudi Arabia.
But, DRL sells diesel at N1,200 per litre in Nigeria, which translates to about 120% higher than what it’s sold for in the same Saudi Arabia that the President of DRL was making a reference to in his Bloomberg interview.
Further, we need take a look at some costs of production, especially, personnel. Is the amount paid, for example a refinery operator in Saudi Arabia same as what DRL pays ?
An enquiry reveals a monthly salary of around SAR 6,000 Saudi Riyal is what a refinery operator earns in Saudi Arabia, that is N2.6 Million Naira. Do DRL pay it’s refinery operators such per month ? One will be interested to know this.
Secondly, we should take a look at the purchasing power parity of both Countries.
The minimum wage in the private sector in Saudi Arabia is SAR 4000 Saudi Riyal per month, that is N1.7 Million Naira.
The question is how many of our private companies in Nigeria pay such as minimum wage per month ?
The Poverty Rate of Saudi Arabia for 2021 was 13.5 % while that of Nigeria, released by the National Bureau of Statistics (NBS), for 2022 was 40.1%.
The question then arises whether Alhaji Aliko Dangote, the President of DRL have taken all this into consideration before making a comparison of the price of petrol pump price in Saudi Arabia to that of Nigeria ?
One needs ask DRL why the price of it’s diesel per litre is 120% above that of Saudi Arabia !
The issue is that so many products are derived from crude oil and a low price in one for the sake of the poor can be spread over so many other products derived therefrom. DRL will be producing polypropylene for plastics. Urea for fertiliser. Aviation fuel for Aeroplanes and a host of others.
The question is what is Dangote giving back to Nigerians taking into consideration what he has gained from Nigeria ?
Are you giving Nigerians more of poverty or more of a life more abundant ?
The answer is dancing there in the winds.
A monopoly must not be allowed to stand in the refinery business in Nigeria.
Petrol, for now, is the live wire of the masses.
It can be sold by DRL at a far lower price than what it has sold to NNPC.
Femi Oniyide Esq.
Coordinator, Advocacy For Integrity and Economic Development (AIED).
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