Donald Duke Urges President Tinubu to Commercialise Crude By-products to Cut Petrol Price to N200-N300

Sunday Ehigiator

Former Cross River State governor and presidential candidate of the Peoples Redemption Party (PRP), Donald Duke, has urged President Bola Tinubu to commercialise the by-products of crude oil to enable Nigerians access petrol at between N200 and N300 per litre.

Duke said the federal government could significantly reduce the cost of petrol by supplying crude oil allocated for domestic refining at its production cost, rather than at the international market price, while selling other refined products at commercial rates.

He spoke during an interview with journalists over the weekend in Abuja, against the backdrop of renewed debate over petrol subsidy following former Vice-President Atiku Abubakar’s declaration that he would restore subsidy if elected president in 2027.

Duke argued that the debate over subsidy had failed to take into account the fact that crude oil produced in Nigeria was a national resource belonging to Nigerians.

“I don’t believe there is a subsidy. I have said it at several forums. This oil is our own. It belongs to all of us. It is our commonwealth. Don’t look at the price of the oil in the international market,” he said.

According to him, Nigeria produces approximately 1.7 million barrels of crude oil daily, with about 300,000 barrels required for domestic consumption, while the remaining 1.4 million barrels are sold commercially.

He said the crude allocated for local refining should therefore be priced according to the actual cost of production.

“We produce about 1.7 million barrels. About 1.4 million barrels we sell commercially. These 300,000 barrels, look at the cost of production, not the international price.

“While we sell oil at $70 or $80 a barrel, the cost of production may not exceed $40 a barrel. That barrel has about seven by-products,” Duke stated.

The former governor maintained that petrol represented only one of several products derived from crude oil and should not be made to carry the entire cost of the barrel.

He proposed that crude supplied to domestic refineries should be sold at production cost, with a modest margin added to cover the cost of refining and distribution, while other petroleum products are sold commercially.

“Give it to us at the cost of production, not at the market price. Take into cognisance the cost of refining and distribution and put five or 10 per cent above it.

“Sell the five other by-products from a barrel of crude at commercial rates. You will find that you can easily amortise the petrol and give it to your people at N200 or N300,” he said.

Duke’s proposal is based on the argument that the economics of a barrel of crude should be assessed across all the products obtained from it, rather than determining the cost of petrol solely from the international value of the crude.

An analysis credited to Chief Ekpenyong Eyo estimated that a barrel of crude could produce about 55 litres of petrol, in addition to diesel, aviation fuel, liquefied petroleum gas, naphtha and other products.

Using assumed market prices, the analysis estimated that revenues from the other products could substantially offset the cost of the crude, leaving only a fraction of the barrel’s total cost to be recovered through petrol.

The calculation is illustrative, as actual refinery yields, crude production costs, refining expenses and petroleum product prices vary.

Duke nevertheless maintained that commercialising the other products could provide sufficient revenue to reduce the effective cost of petrol without necessarily returning Nigeria to the previous subsidy regime.

He also argued that affordable energy should be viewed as an instrument for driving economic activity, rather than solely as a source of government revenue.

“Why is it important? That is what drives your economy. That is what drives the country. You have got to use what you have to get what you want,” he said.

Duke also dismissed concerns that reducing the price of petrol could encourage smuggling into neighbouring countries.

He argued that the government should strengthen border controls instead of transferring the cost of ineffective enforcement to Nigerian consumers.

“Are you going to punish your people because you cannot police your borders?” he asked.

The former governor proposed that the government could introduce a distinct colour for petrol distributed for domestic consumption, making it easier for security agencies to trace the product when it is smuggled across Nigeria’s borders.

“You can dye your petrol. You can say petrol from Nigeria is purple, blue, yellow or red. It does not affect the engine. If you find that colour of petrol in Chad or Niger, you know it came from Nigeria. Your security agencies should find out how it got there,” he said.

Duke, in his intervention, also cautioned the Federal Government against adopting economic prescriptions from international institutions without considering Nigeria’s peculiar circumstances.

He specifically criticised the argument that subsidies were inherently responsible for Nigeria’s economic difficulties, pointing to the use of subsidies by advanced economies to support essential sectors and protect their citizens.

“Don’t follow the Bretton Woods institutions, the World Bank and IMF, when they tell you that subsidy is why you are poor.

“They subsidise food because they have to keep their people productive. Whatever keeps your people alive and you have in abundance, use it.

“I am not saying sell it at a loss. Sell it at the cost of production and add maybe 10 per cent. That subsidy issue has to be revisited, and we have to understand what subsidy really means,” he said.