…Osifo attributes high petrol prices to FX rate
… says petrol price may drop to under N600/L, if Naira strengthens to below N1,000 per $
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Oredola Adeola
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has attributed the challenges in Nigeria’s power sector on the absence of competent and knowledgeable professionals in key positions within the Ministry of Power, the Nigerian Electricity Regulatory Commission (NERC), and other critical agencies.
The association also raised alarm over the country’s persistent power crisis, citing frequent grid collapses and other systemic failures.
In 2024 alone, Nigeria has recorded 12 grid collapses, alongside recurring tripping of transmission lines and the inability to generate adequate electricity, with output consistently hovering between 3,000 and 4,000 MW.
Comrade Festus Osifo, PENGASSAN President, made this known while discussion critical national issues during the association’s National Executive Council (NEC) meeting held in Lagos on Thursday.
Osifo further urged the Federal Government to prioritize the appointment of qualified and experienced personnel to lead the sector, emphasising the importance of placing capable individuals to head Ministry, departments and agencies to ensure sustainable solutions to the nation’s power challenges.
While commending President Bola Tinubu’s administration for decentralizing the power sector, the PENGASSAN President stated that it is important to put the right people in the right positions, due to the technical nature of power generation, transmission, and distribution.
He said, “The continuous grid collapses—12 incidents in 2024 — recent trip-off of transmission lines and the inability to generate sufficient electricity, ranging between 3,000 and 4,000 MW since 1999 despite billions of dollars invested in the power sector, are clear indicators of the need for better leadership and infrastructure protection.”
Osifo stressed the importance of selecting highly qualified Nigerians to lead the Ministry of Power and NERC, saying, “Nigeria is blessed with intellectuals, and we must utilize the best talents to manage these critical sectors.”
The President of PENGASSAN who also confirmed the partial operation of the old Port Harcourt and Warri refineries, emphasized that fully operational refineries would not only generate primary and secondary employment opportunities but also enhance Nigeria’s capacity to earn foreign exchange.
He said, “We acknowledge that the old Port Harcourt and Warri refineries are back onstream, and work is ongoing at the Kaduna and new Port Harcourt refineries.
He said, “However, we will continue to push until all refineries are fully operational. Functional refineries will not only create primary and secondary jobs but also provide Nigeria with opportunities to earn foreign exchange, as their value is immense.”
He also cautioned Nigerians and critics against being overly fixated on blending in the refineries, explaining that it is not unusual.
He said, “Instead, various operations are necessary to ensure that PMS meets the standards suitable for vehicles in the country.
“While Nigeria’s refineries are not yet operating at full capacity, they are functional. However, refining crude oil involves complex processes to ensure petrol (PMS) meets the quality standards for modern day vehicles.”
Osifo further identified the exchange rate as the primary factor influencing the high cost of petrol in Nigeria.
He stated, “The high pump prices of petroleum products are directly tied to the exchange rate. If the naira strengthens to less than N1,000 per dollar, PMS could be sold for less than N600 per liter.”
He clarified that while crude oil allocated to local refineries, including Dangote Refinery, is priced in Naira, the value is pegged to the international dollar benchmark.
“Most of the equipment used in oil exploration and production is procured in dollars, making the oil and gas sector largely a USD-based business,” he added.
Osifo noted that the decline in crude oil prices from $83 to $70 per barrel toward the end of 2024 was responsible for the reduction in petrol prices during the festival season.
He stated, “If Nigeria’s foreign exchange strengthens and crude prices appreciate, the pump price of PMS will decrease.”
Osifo urged Nigerians to expect a marginal increase in petroleum product prices in the coming days, unless there is an improvement in the exchange rate.
He added, “However, if our local refineries operate efficiently, we can significantly reduce logistics and transportation costs.”
The PENGASSAN President also emphasized the job creation potential of fully functional local refineries, citing the over 2,000 jobs created when the Port Harcourt Refinery was operational.
Osifo said, “If all refineries are working, more Nigerians will gain employment, and we can eliminate the logistics costs associated with importing refined products.
“Without local refining, petrol could cost as much as N1,300 per liter,” he warned.
The PENGASSAN President also stressed the need for proper management of the FX market, urging Nigerians to pray that the naira does not continue to devalue to the levels seen in countries like Venezuela and Zimbabwe.
He added that despite Nigeria being an import-dependent country, the country did not face FX challenges in the past until recently.
He said, “Since June 2024, there has been a significant erosion in the value of the Naira, a crisis that has its roots dating back to 2016.
Osifo explained that the rising costs of goods and services in Nigeria are largely due to the weakness of the naira.
He further emphasized the importance of expanding the nation’s revenue base by fully harnessing the country’s mineral resources, given their widespread availability.
Osifo called for the exploration and value creation from these resources to create diverse revenue streams for the country, which according to him would help generate jobs, create additional revenue sources and boost economic growth.
