Vetiva Capital Counters Dpr, Says Petrol Can’t Sell At N1,000/litre

Vetiva Capital has picked holes with the projection by the Department of Petroleum Resources that prices of Premium Motor Spirit may hit N1,000 when subsidy is fully removed.

The DPR Director, Sariki Auwalu, during an event on the ‘Future of Nigerian Petroleum Industry’ in Lagos said that the current price of N162/N163 per litre will rise as high as N1,000.

But an analyst at Vetiva Capital, Joshua Odebisi, during an interview on Arise Tv said the projection was unrealistic even if crude oil prices hit $100 per barrel.

He said, “To some extent when you think about it, we have seen their calculations in the past where they said that the pump price of petrol will reach around N360.

“I think N1,000 is a bit high, that maybe making the assumption that crude oil prices should top above $100 per barrel, but I think that is more than unlikely and on top of that, there are still a few other factors that would have to come into play for us to reach that level.”

Just last month, the Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, said petrol cost at the fueling station should be N256 per litre without government subsidy.

Nigeria spends over $1bn annually on subsidy, an amount which the NNPC boss said should have gone into infrastructure.

“I don’t think that the landing cost of petrol will ever get to that level and it is not in the near term that we will start to see prices of up to a thousand naira. I think that is quite a little bit extreme,” Obedisi added.

The DPR boss also advocated for alternative fuel as a hedge to the prices which he said would hit N1,000.

It will cost $3.2bn to convert eight million public vehicles currently present in Nigeria to run on compressed natural gas (CNG).

Nigeria has 22 million cars, while the NNPC will help convert 1 million cars to gas for free by the end of 2021.

The Federal Government made the pledge almost a year ago.

The average cost of converting a car is about $400 an equivalent of N201,200.