‘Why Local Refineries Won’t Produce PMS’

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The optimism of self sufficiency that trails the springing up of local refineries in the country may not necessarily end Nigeria’s dependence on fuel importation, an expert has said.

Speaking at a one-day policy dialogue on “Reporting the Nigerian Oil and Gas Sector” held at the weekend in Lagos, Henry Adigun, who is the Team Leader, Facility for Oil Sector Transformation noted that the absence of complete deregulation of the nation’s downstream sector would leave Petroleum Motor Spirit (PMS) aka petrol production unattractive to local refinery operators.

According to him, the uncertainty around the price of PMS in the country deters investors, adding that no investor would venture into production without taking cognizance of the market for his product.

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He stated that there might not be any major difference in prices of imported petroleum products even as more refineries commence operation in the country.

According to Adigun, the cost of refining in Nigeria might even be higher because of inefficiencies. Adding that lack of infrastructure, cost of power, quality manpower, transportation, among other inefficiencies in the system could push up the cost of production.

He further stated that the 650,000 barrels per day Dangote refinery expected to come on stream by next year, may not also guarantee that Nigerians would pay less for petroleum products. “Dangote won’t sell to Nigerians at Naira rate because crude is bought at foreign exchange rate.  So, local refining may not translate to cheaper cost of the petroleum products for Nigerians.

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He explained that most local refineries focus on diesel, kerosene, naphtha and heavy fuel oils production because the products are fully deregulated unlike PMS its price is being controlled by the government.

“A number of refineries have been built, but none of them is willing to start refining PMS under the regime that has fuel price controlled.

“Full deregulation will encourage more investment in local refining because no investor wants to venture into refining of PMS when the market is not there because of government’s control,” Adigun said.

By Peace Obi

More Nigeria Oil and Gas Industry News on Orient Energy Review.


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