NMDPRA Gives Reason Why Fuel Price Will Decrease Soon in Nigeria

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) states that price of fuel in Nigeria will decrease soon because of price competition. According to reports, the resumption of operations at the Warri Refining and Petrochemicals Company Limited (WRPC) has generated optimism among oil marketers and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) about a potential decrease in the prices of refined petroleum products. This development, they believe, will intensify competition within the downstream oil sector, compelling domestic refiners to reduce prices to attract buyers.

The Nigerian National Petroleum Company Limited (NNPCL) announced that the Warri refinery, with a capacity of 125,000 barrels per day, has commenced operations. This follows closely on the heels of the Port Harcourt Refinery's restart, which began producing 60,000 barrels per day just a month prior. The NNPCL also revealed plans to export refined products to international markets, which could bolster the country’s foreign exchange reserves.

During an inspection tour of the Warri facility, NNPCL Group Chief Executive Officer Mele Kyari emphasized that although repairs are not yet fully complete, the refinery has started producing straight-run kerosene, diesel, and naphtha. President Bola Tinubu celebrated this milestone, noting that the refinery is operating at 60 percent capacity, translating to 75,000 barrels per day.

Kyari highlighted the significance of this restart, stating, “We are taking you through our plant. This plant is running. Although it is not 100 percent complete, we are still in the process. Many people think these things are not real. They think real things are not possible in this country. We want you to see that this is real.” He added that the refinery's operations would help Nigeria become a net exporter of petroleum products.

The NNPCL CEO explained that the Warri refinery has three stages, with the first stage, known as Area One, already operational. This stage can produce high-grade diesel, kerosene, and naphtha. He assured that the facility's operations would generate cash flow, making the company profitable and helping fulfill President Tinubu’s promise of making Nigeria a net exporter of petroleum products.

The refinery’s restart is part of a broader strategy to reactivate all three major refineries in Nigeria. Kyari stated that the Kaduna refinery is also in the process of restarting, with an announcement on its operational status expected soon. He commended the NNPCL team for their determination and efforts to achieve this milestone, in collaboration with contractors and staff.

The National Operations Controller of the Independent Petroleum Marketers Association of Nigeria, Mustapha Zarma, welcomed the Warri refinery’s restart, noting that it would intensify competition in the downstream sector and force prices of refined products to drop. “Certainly, there is going to be a further drop in prices once the facility starts pumping out products in large volumes,” he said. Zarma also expressed hope that all three refineries would soon be operational, which would ultimately benefit consumers by reducing fuel prices.

NMDPRA Chief Executive Farouk Ahmed echoed these sentiments, stating that the Warri refinery’s operations would drive down petroleum product prices in Nigeria. He highlighted that investors are building modular refineries, which will further benefit Nigerians. Ahmed noted that the determination of President Tinubu and the regulatory push has resulted in significant achievements, including a Yuletide season without fuel queues for the first time in over two decades.

Ahmed added that the abundance of products due to increased refining capacity would reflect on pricing, benefiting consumers. He emphasized that the market competition is not a price war but a healthy competition for market share, which will help stabilize prices. The NNPCL’s efforts to ensure all refineries are operational will enhance energy security and positively impact the economy.

The Secretary of IPMAN, Abuja-Suleja, Mohammed Shuaibu, pointed out that the Warri refinery’s restart would reduce the demand for dollars to import fuel, thus positively impacting Nigeria’s foreign exchange reserves. He noted that with more refineries coming on stream, including the Dangote refinery, the competition in the downstream oil sector would be intense, leading to further price reductions.

The Warri refinery’s rehabilitation, which began in 2021 at a cost of $898 million, represents a significant step towards reducing Nigeria’s reliance on costly fuel imports. Located in Warri, Delta State, the refinery produces a range of petrochemical products, including polypropylene and carbon black. Inaugurated in 1978 and managed by NNPCL, the WRPC was initially designed to process 100,000 barrels of crude oil per day, later upgraded to 125,000 barrels per day in 1987.

The restart of the Warri refinery, coupled with the operations of the Port Harcourt and Dangote refineries, marks a critical milestone in Nigeria’s journey towards self-sufficiency in refined petroleum products. This development is expected to reduce fuel prices, enhance energy security, and improve the country’s economic stability by reducing the need for fuel imports.

The NNPCL Board Chairman, Pius Akinyelure, expressed his gratitude to the refinery staff for their efforts in achieving this milestone. He emphasized that Nigeria would soon stop importing refined petroleum products and instead start exporting them, further strengthening the value of the naira.

President Tinubu welcomed the reopening of the Warri Refinery, describing it as a significant achievement that strengthens the hope of Nigerians in his administration. He praised the NNPCL management for their hard work and commitment to restoring Nigeria’s refining capacity. Tinubu reiterated his administration’s determination to ensure all four state-owned refineries are fully operational, contributing to Nigeria’s energy efficiency and security.

In conclusion, the restart of the Warri Refinery signifies a new era in Nigeria’s oil and gas sector. It promises to drive down fuel prices, enhance competition, and reduce the country’s reliance on fuel imports. This development not only boosts Nigeria’s economic prospects but also restores confidence in the country’s ability to achieve self-sufficiency in refined petroleum products. With continued support and investment, Nigeria is poised to become a hub for downstream industrial activities in Africa, fulfilling the vision of a more prosperous and self-reliant nation.