Bismarck Rewane, economist and CEO of Financial Derivatives Company, has emphasized the precarious position of the Nigerian National Petroleum Corporation (NNPC), which holds a stake in both the supply and purchase of petroleum products. He stated that NNPC is currently selling its products below their marginal cost, with 855 Naira’ not reflecting the true landed cost.
He argued that the average price of refined petroleum in Nigeria should be aligned with the deregulated and liberalized price of diesel, which stands at 1,210 Naira per liter. He noted that NNPC’s selling price, below 900 Naira, creates a significant gap. If Dangote’s prices were set higher, such as 1,200 Naira or 1,300 Naira, it could establish an arbitrage corridor that might lead to substantial financial challenges for Dangote. This pricing discrepancy could destabilize the market and strain the operations of the world’s largest single-train refinery.
He said in an interview with Arise TV from 2:40, “NNPC has a stake in both the supply and the purchase, putting it in a strong but delicate position. NNPC is offering its products below its marginal cost—’855 Naira is not the true landed cost. The average price of refined petroleum in Nigeria should be benchmarked against the price of diesel, which is deregulated and liberalized. Currently, diesel is priced at 1,210 Naira per liter.
NNPC is selling below 900 Naira, which means there’s a significant gap. If Dangote sells at a higher price, such as 1,200 Naira or 1,300 Naira, it would create an arbitrage corridor. This discrepancy could cause significant issues for Dangote and the market, as it would potentially make the largest single-train refinery in the world face serious financial difficulties.”….V¡ew–Mõre