Tonye Cole Breaks Down Factors Keeping Fuel Prices Over ₦700

The resumption of operations at the Port Harcourt Refinery has sparked discussions on the future pricing of Premium Motor Spirit (PMS) in Nigeria. Despite expectations of lower fuel prices, Tonye Cole, the APC governorship candidate for Rivers State in the 2023 elections, has explained...READ MORE…

why PMS prices are unlikely to fall below ₦700 per liter.

Key Points:

1. Refinery Operations:
   • The Port Harcourt Refinery is operating at 60% capacity, refining 60,000 barrels of crude oil daily.
   • It aims to complement production from the Warri Refinery once it begins operations.
2. Challenges to Price Reduction:
   • Imported machinery and materials used for refurbishment involve significant foreign exchange costs.
   • Even though refined crude is sold in naira, the costs of maintaining and operating the refinery are influenced by international markets.
3. Consumption and Forex Implications:
   • A reduction in fuel consumption has lessened pressure on foreign exchange demand, as imports have declined.
   • This offers some relief to the economy, but structural challenges remain.
4. Government and Industry Perspectives:
   • While the refinery’s resumption is a positive development, Cole asserts that addressing structural inefficiencies is necessary to achieve substantial price reductions.
   • NNPCL has emphasized that the price of locally refined PMS is still lower than the cost of imported alternatives.

Implications:

• The refinery’s partial operation highlights progress in the petroleum sector but underscores persistent issues like foreign exchange dependency and infrastructure gaps.
• Long-term price stability will likely depend on broader reforms and increased local refining capacity.

This development is critical for Nigeria’s energy sector as the government seeks to reduce dependency on imports and stabilize the economy.

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