The Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, has said that it would be suicidal for Dangote Refinery to sell petrol below its production cost.
Rewane made this statement on Channels Television’s Business Morning segment of Sunrise Daily breakfast programme on Tuesday.
According to him, Dangote Refinery or any other refinery apart from government-owned refineries is in business to produce at a profit.
He added that they would produce at a price point where their marginal cost equals their marginal revenue and they will not sell below cost if not if they do that consistently, they will go out of business.
“What Dangote Refinery is assuring the country is quality and quantity but that pricing is not necessarily in the hands of Dangote Refinery but in the hands of the market; the market determines the price including the global crude price, guaranteed margin and the cost of processing. It’s as simple as that. Nobody goes into business to sell below its cost price if not that is suicide.
“I think we should get along rather than be carried away by false expectations. Yes, it’s good to know that the petrol is being lifted, it is a milestone from our own refineries which we had before but now we have the largest single-train refinery in the world. We have it as a result of the initiative of Alhaji Dangote but now it is business time,” he stated.
Rewane also said the August inflation figure which showed a decline was not sustainable.
Don’t expect Dangote Refinery to sell petrol below cost price – Economist
