Accord Party chieftain Gbenga Olawepo-Hashim has argued that petrol could sell for about N605 per litre in Nigeria if the cost of locally produced crude and other components of the petroleum value chain were properly determined.
Olawepo-Hashim made the argument during an interview on Channels Television’s Politics Today, where he criticised the Federal Government’s approach to petrol pricing and challenged the justification for the high pump price currently faced by Nigerian consumers.
The politician described the policy surrounding the removal of petrol subsidy as “insanity,” arguing that Nigeria, as an oil-producing country, should not automatically subject crude supplied to domestic refineries to the same pricing framework used for crude sold on the international market.
According to him, the debate over petrol subsidy has been influenced significantly by the way the government accounts for crude and determines its value for domestic consumption. He described the previous subsidy arrangement as “accounting magic” rather than a straightforward reflection of the actual cost of producing and delivering petrol to Nigerian consumers.
Olawepo-Hashim challenges domestic crude pricing
At the centre of Olawepo-Hashim’s argument is the price assigned to crude produced in Nigeria and supplied for domestic use.
He said data he attributed to the Nigerian National Petroleum Company Limited indicated that the cost of producing a barrel of crude in Nigeria was about $30. He argued that other costs and a reasonable margin could then be added to arrive at a more realistic cost structure for petroleum products.
In his calculation, Olawepo-Hashim said a $15 margin on the crude production cost, together with approximately $5 for refining and another $7 for transportation and insurance, would put the combined figure at about $57 per barrel.
He said that calculation would translate to a petrol cost of roughly 34 cents per litre. Using an exchange rate of N1,400 to the dollar, he estimated the resulting price at approximately N501 per litre.
Rather than stopping at that figure, however, Olawepo-Hashim proposed a pump price of about N605 per litre. He said an additional N100 could be incorporated as an energy tax to provide funding for the development of alternative energy sources.
The figures are part of his proposed pricing framework and represent his own calculation of what petrol could cost under a different domestic crude-pricing structure.
‘It is insanity and idiocy’
Olawepo-Hashim was particularly critical of the argument that domestic and international oil prices should simply be left to market forces.
He said such an approach was inappropriate for an oil-producing country and accused the Tinubu administration of adopting what he considers an unnecessarily expensive pricing framework.
“It is insanity and idiocy for anybody, especially for the president of an oil-producing country, to say that both domestic and international oil prices you leave to market forces,” he said.
He added that the decision by President Bola Tinubu to allow the market to determine petrol prices after the removal of subsidy was, in his view, misguided.
Olawepo-Hashim’s criticism is centred on the distinction between the international value of crude and the cost that should be assigned to crude destined for domestic processing.
He argued that while international crude prices may represent the opportunity cost of selling Nigerian oil abroad, that benchmark should not necessarily become the price paid for crude consumed within the country.
Why he disputes the subsidy argument
The Accord chieftain also challenged the description of Nigeria’s previous petrol pricing arrangement as a conventional subsidy.
He argued that the difference between an international benchmark and the domestic cost of petroleum should not automatically be treated as a subsidy loss, particularly where the crude is produced locally and intended for domestic consumption.
“What you have had really has never been any subsidy, even when we had lower pump petrol prices. The subsidy issue is more of an accounting magic,” Olawepo-Hashim said.
His position is that the government should first establish the genuine cost of producing crude, refining it and moving the resulting petroleum products through the supply chain before determining the final price consumers should pay.
He further argued that the domestic market should not be treated in exactly the same way as an international market when the country is supplying its own crude to local refineries.
“You cannot price your local products at international price,” he said.
Calls for greater transparency
Olawepo-Hashim also called for greater transparency around the figures used to determine Nigeria’s crude production and petroleum pricing costs.
He questioned why crude produced locally should attract the pricing structure currently applied to it for domestic consumption and challenged the government and other stakeholders to make the underlying figures available for public scrutiny.
The politician alleged that the existing system could be vulnerable to “a lot of over-invoicing,” although the claim was presented as his allegation rather than an established finding.
He called on those who disagree with his calculations to produce the relevant financial records and demonstrate what it actually costs to produce a barrel of crude in Nigeria.
“If anyone has a different idea, they should bring their books. Let’s see what it is, how much it costs to produce a barrel of crude in Nigeria,” he said.
The demand for greater transparency forms a key part of his argument that Nigerians should not simply be told that higher petrol prices are unavoidable because of global market conditions.
Saudi Arabia and Kuwait cited
In making his case, Olawepo-Hashim referred to other oil-producing countries, including Saudi Arabia and Kuwait, which he said do not apply international crude pricing to their domestic markets in the same way Nigeria does.
His argument is that oil-producing countries should be able to structure domestic energy pricing around their own production realities rather than automatically transferring international opportunity costs to consumers.
He maintained that the approach would require a clearer separation between crude sold internationally and crude supplied for domestic processing.
For Olawepo-Hashim, such a system could create room for cheaper petrol without necessarily relying on what he described as an opaque subsidy arrangement.
The proposal therefore rests on a combination of domestic crude pricing, production-cost transparency and a reassessment of the costs assigned to refining, transportation and insurance.
N605 proposed as a possible pump price
Olawepo-Hashim’s N605 proposal is therefore not simply a call for government to impose a lower price at petrol stations. It is based on his argument that the underlying cost structure should first be recalculated.
His calculation places the cost of crude production at about $30 per barrel, with additional margins and downstream expenses bringing the figure to approximately $57 per barrel. From there, he estimated a lower equivalent petrol price and proposed N605 per litre as a sustainable pump price, including an energy tax.
He has also previously argued that the price could eventually fall further if production costs and the exchange rate improve, but the immediate figure highlighted in the latest discussion was N605 per litre.
The proposal comes amid continued political debate over petrol pricing, the economic consequences of subsidy removal and the extent to which domestic refineries should receive crude at prices linked to international benchmarks.
Olawepo-Hashim’s intervention adds another position to that debate, with his central argument being that Nigeria’s status as a major oil-producing country should allow it to develop a domestic pricing system that reflects the actual cost of producing and processing its own crude.
For now, the N605 figure remains Olawepo-Hashim’s proposed price based on his stated assumptions and calculations. His broader demand is for the government to open the books on crude production and petroleum costs so Nigerians can examine the figures behind the price they pay at the pump.
Olawepo-Hashim Says Petrol Can Sell for N605 Per Litre, Calls Subsidy Debate ‘Accounting Magic’
