Aradel Holdings Plc has announced plans to commence production of Premium Motor Spirit (PMS), also known as petrol at its modular refinery located in Rivers State in 2027.
The move is driven by the deregulation of Nigeria’s downstream petroleum market in recent years under the current administration.
According to an interview published by Bloomberg on Thursday, Aradel’s General Manager of Refinery, Temitayo Ogunbanjo, announced the plan, saying that the deregulation of the downstream petroleum market, which formally occurred with the removal of fuel subsidies by the Nigerian government in 2023, “has now created a path” to manufacture petrol domestically, making it more commercially viable.
Previously, government-controlled pump prices made it difficult for local refiners to compete with imported fuel.
For years, many local refined petroleum producers did not invest in producing petrol because it was deemed unprofitable due to the subsidy regime, a scheme that allowed the Federal Government to pay importers to bridge the cost of imported petrol for Nigerian consumers.
With the growing financial burden on the government over the years, the scheme was terminated in June 2023 at the inception of President Bola Tinubu’s administration, ending the price-fixing regime.
While the end of the fuel subsidy policy opened doors for local refiners to enter the market long dominated by importers, it unfortunately left a trail of a significant jump in fuel prices across the country.
Aradel’s business spans crude production, refining and distribution. The company currently operates an 11,000-barrel-per-day modular refinery in Rivers State, which produces kerosene, diesel, gas oil, and naphtha.
READ ALSO:
- Hidden Risks Behind Aradel’s 252% Profit Surge
- Imported Petrol Cost Rises above Dangote Refinery Fuel
- Dangote Refinery Further Raises Petrol, Diesel Prices as Crude Rises above $110
- Dangote Reverses Dollar Pricing, Fixes Petrol at N1,215/Litre
In addition to petrol production, the company is considering expanding the refinery’s capacity to produce aviation fuel for local distribution and export to European markets. With the expansion plans, the company is also reviewing its crude supply arrangements and export logistics to support its drive, Ogunbanjo stated.
The company has not yet disclosed the investment cost for the new petrol unit. More detailed plans are expected to be developed following engineering studies over the coming year.
Analysts have noted that Aradel’s plans are boosted by perceived higher earnings arising from high crude prices due to the ongoing US-Iran war in the past five months.
Aradel’s production expansion move comes at a time when there is increasing emphasis on the need for robust investment in energy infrastructure such as domestic refineries in Nigeria and Africa as a whole, to boost the energy security drive. The region has particularly grappled with intermittent global energy market shocks caused by the geopolitical tensions in the Middle East that have significantly disrupted the supply chain.
Victor Ezeja is a Nigerian journalist skilled in producing insightful news analyses, feature stories, and interviews that simplify complex issues and drive informed public discourse. His work combines rigorous research, balanced reporting, and compelling storytelling to highlight developments shaping industries and society. Victor, who holds a Master's Degree in Mass Communication, specializes in energy, aviation, business, and economic reporting. He can be reached via @VICTOREZEJA on X