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‘Freight rate: FG to save $30.87 per MT of petroleum products from Dangote Refinery’
Considering the Lagos location of upcoming Dangote Refinery, Business Hilights Intelligent Unit (BHIU), an independent business research arm of Business Hilights Media Group, publishers of Business Hilights Online and Markets Business Hilights Newspapers, has revealed that the from the onset of production, the Federal Government will be saving average of $30.87 being the cost of freight rate per metric tonne (PMT) of refined products from North-West Europe to West African Frontier.
Recall that at a briefing on Monday, the Executive Secretary, Petroleum Products Pricing Regulatory Agency (PPPRA), Abdulkadir Saidu, said the reference freight rate from North-West Europe to West African Frontier averaged $30.87 per metric tonne, adding that the rate decreased when compared to previous week’s average of $35.45 per metric tonne.
According to the BHIU Report, the landing cost and Expected Open Market Price for petrol which averaged N146.85/litre and N166.22/litre respectively for the Nigerian National Petroleum Corporation (NNPC) imports only, will further drop as landing cost will technically be subsumed based on the fact that the refining point is now in Nigeria.
According to the Report, “Taking Nigeria’s fuel import of 705, 185 MT for the month of January 2019 as a case study were the Federal Government coughed out $21,77m at an average of $30.87, it means that Dangote Refinery will save serious fortunes for the government and Nigerians in general from unprecedented capital flight on a monthly basis as soon as it begin production.”
Additional details from the Nigerian Ports Authority (NPA) Shipping Position document which shows the volume and types of cargoes that are brought into the country on a daily basis revealed that apart from fuel, other wet cargoes which Dangote Refinery will save millions of dollars for the country aside fuel include Aviation Turbine Kerosene, Automotive Gas Oil, and other petroleum products.
“For instance, still using data from the month of January 2019, whereas 24, 266 MT of Aviation Turbine Kerosene, which is also known as Jet A1 of aviation fuel was imported, 98,512 MT of Automotive Gas Oil, otherwise known as diesel, was also imported in the same period which gave a total metric tonnage of 122,778MT.
“Then, multiplying the joint figure with the freight rate from North-West Europe to West African Frontier averaged $30.87 per metric tonne; total amount saved for the government would be $3.8m in just one month.
The BHIU Report averred that “Another added advantage of Dangote Refinery when it comes on stream will be the drastic reduction in the yearly budget for petroleum subsidy payment.
“Otherwise, with the inclusion of about N750.81bn on petrol subsidy in 2020, based on data obtained from the PPPRA, during the regime of Dangote Refinery, the amount will be reduced drastically because henceforth, the draining shipping cost and the average freight rate will be no more.