Nigerian Workers Urged to Demand Production-Cost Pricing Model for Petrol

Nigerian workers are being urged to demand a production-cost pricing model for petrol that could bring the pump price down to between N435 and N687 per litre, alongside the rehabilitation of the country's four government-owned refineries.

Prof. Izielen Agbon, a petroleum engineer and economist, made this argument at a virtual public discussion organised by the Alliance on Surviving COVID-19 and Beyond (ASCAB).

The production-cost pricing model would determine PMS prices from the cost of crude oil, refining, transportation, distribution, and applicable taxes, rather than the international opportunity cost used under the import-parity model.

Agbon said applying this model to the 445,000 barrels-per-day domestic crude allocation reserved for NNPCL refineries could result in a petrol price between N435 and N687 per litre at an exchange rate of N1,333 per dollar.