By Emmanuella Anokam
An economic expert, Dr Chijioke Ekechukwu, has urged the Federal Government
to supply crude oil to local refineries at subsidised rates to cushion the impact of
global supply disruptions on domestic petroleum product prices.
Ekechukwu, who is the Managing Director/Chief Executive Officer of Dignity
Finance and Investment Ltd., made this known on Sunday in Abuja.
Ekechukwu was reacting to the middle-east crisis and global tensions for the
energy sector, particularly Nigeria’s petroleum industry.
The recent tensions involving the U.S., Iran, Israel and allied nations, including
hostilities particularly around the strategic Strait of Hormuz has intensified
geopolitical pressure and significantly disrupted energy markets and supply chains.
The economist explained that in a deregulated petroleum products market, prices
were largely determined by global demand and supply dynamics.
According to him, the tensions, which have triggered supply distortions across the
Gulf region, naturally pushed international oil prices upward due to fears of
reduced supply from major crude oil producing countries, adding that such
geopolitical crises usually led to market volatility and higher prices, as key
suppliers of crude oil were affected by the instability.
To mitigate the impact on Nigerians, Ekechukwu advised the Federal Government
to prioritise domestic energy security by supplying crude oil to local refineries at
discounted rates.
He said the arrangement would enable refineries to process and sell petroleum
products locally at relatively stable prices, while Nigeria continues to export crude
oil at prevailing international market rates.
“In the case of the U.S.-Iranian war, which culminated in supply distortions around
the Gulf countries, prices will automatically react to a shortage of supply.
“Prices, therefore, are expected to rise because major crude oil suppliers are in
crisis.
“For the Federal Government therefore to cushion the effect of this supply
distortion, which has affected the global price, we should supply crude oil to our
local refineries at subsidised prices to refine and sell at regular prices,” he said.
He added that with its massive refining capacity, the Dangote Refinery was capable
of meeting a significant portion of Nigeria’s domestic demand for refined
petroleum products, thereby reducing dependence on imports.
He further emphasised the need for stricter border controls to prevent the
smuggling of refined petroleum products out of the country, warning that weak
enforcement could undermine efforts to stabilise local prices.
According to him, tightening border security alongside targeted crude supply to
domestic refiners will ensure that the benefits of the policy are retained within the
country and shield consumers from sudden price hikes.
