SIR: Before the twin policies of fuel aid elimination and currency exchange rate marriage by President Tibunu’s administration, the main cost of fuel (PMS) had to do with N192, diesel (AGO) N850, kerosene (DPK) N1,100, air travel fuel (Jet-A1) N700, and cooking gas (LPG)/ kg about N750.CONTINUE READING>>>>> > > > > >
After execution of the stated policies, the cost of fuel went to a little above N600 and stayed there for rather a long time regardless of instant “repercussions” of the policy of the currency exchange rate marriage in the forex market, which caused the totally free fall in the worth of the naira from the main rate of N414 to above N1,900 in the parallel market.
Within the very same duration, the costs of diesel increased from about N850 to about N1, 700; kerosene from N1,100 to about N1, 450; air travel fuel from N700 to about N1,500; and cooking gas from about N750 to about N1, 200. Those who understand the criteria in the market understand too extremely well that there was no magic whatsoever that might have kept the cost of fuel (PMS) the same as we had it unless aids were paid whether formally or otherwise.
Specialists in the oil and gas market will concur with me that had actually gas cost been really cost-reflective with no type of aid after its well-known elimination, its rate would have because been taking on those of diesel and kerosene. Aids were gotten rid of in all the spin-offs of petroleum by the previous federal governments, however tries at fuel aid elimination by numerous federal governments at numerous times were mostly withstood.
The present shortage of gas is a procedure of its real cost-reflective rates totally free from any type of aid by the federal government ahead of the entry of Dangote refinery into the market. Dangote refinery will soon begin providing fuel to the marketplace. The entry of Dangote refinery might not bring the expense of fuel listed below N600 as some individuals anticipate due to the fact that the rate we have actually been spending for the item was not cost-reflective if one puts currency exchange rate into factor to consider.
It is apt to state that with Dangote refinery, the expense of diesel and air travel fuel lowered due to the fact that there were no aids on them, the customers paid cost-reflective rates on them. Fuel is a various story. The rate of fuel might not return to pre-May 2023 since cost-reflective rate has actually not been charged for the item.
The decrease of the rate of diesel from about N1700 to about N1,100 occasioned by enhancement in the worth of naira versus the dollar and the current entry of Dangote refinery into the marketplace is a substantial relief to the economy.
Practically 98% of our strong trucks which move all sort of items to numerous locations for our usage diesel as fuel. The majority of our regional markets utilize diesel for their operations, while the majority of our personal vehicles utilize gas. If the cost of diesel remains at its present level or goes lower, we will likely see its influence on the rates of products!
Couple of days to the end of president Obasanjo’s administration in 2007, 51% stakes of our moribund Kaduna and Port Harcourt refineries were privatized to a service consortium led by Aliko Dangote with the objectives of resuscitating them for regional refining, however not long after the late President Yar’Adua took control of, he withdrawed the deal.
It is intriguing to keep in mind that Dangote was given personal refinery licence by the Buhari administration, which he developed from scratch. The Federal Government under President Buhari purchased 20% stakes through NNPL. It deserves keeping in mind that, 20% of whatever will be created by the refinery will go to the Nigerian federal government.
Our optimism about the refinery is that it is anticipated that it will have favorable influence on the Nigerian economy by minimizing our dollar need for fine-tuned items importation, and boost dollar supply from the export of its excess refined items. If that occurs, it will reinforce the naira versus the dollar which ideally will benefit the economy.
The refinery’s 650,000 barrel production capability has to do with 120million litres, which is more than our about 50 million litres regional need daily. It is anticipated to satisfy 100 percent of our intake requirement when totally functional. It is forecasted to conserve Nigeria as much as $10billion in forex and create another $10billion in exports. It will conserve Nigeria about $9bn a year from importing petroleum items.CONTINUE READING>>>>> > > > > >