Only NNPCL Can Purchase Dangote Petrol, Says Oil Marketers.
Operators in Nigeria’s downstream oil sector have stated that no oil marketer in the country will be able to purchase Premium Motor Spirit (PMS), commonly known as petrol, from the Dangote Petroleum Refinery and sell it at the current pump prices, except the Nigerian National Petroleum Company Limited (NNPCL).
On July 15, 2024, Alhaji Aliko Dangote, President of Dangote Industries Limited, announced that the $20 billion refinery was set to begin rolling out petrol in August 2024, having resolved its crude oil supply issues with the assistance of NNPCL and the Federal Government. “Gasoline production is to commence in July with sales from August. Annual revenue is projected to exceed $26 billion,” Dangote stated during a presentation at the refinery.
However, oil marketers have expressed concerns about the feasibility of purchasing petrol from the Dangote refinery. They noted that the product would be priced at the international market rate, which is significantly higher than the current domestic pump prices in Nigeria.
Zarma Mustapha, Deputy National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), confirmed that there had been no official communication regarding the pricing of petrol from the Dangote refinery. However, he emphasized that PMS from the refinery would be sold at international rates, making it financially unviable for marketers to purchase and resell at the prevailing local pump prices.
“The refinery is an independent commercial entity that must cover its refining costs and add a margin before selling the product. The current price of PMS in Nigeria is below the international price, making it impossible for marketers to buy at the international rate and sell at the current pump price without incurring significant losses of N400 to N500 per litre,” Mustapha explained.
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Mustapha suggested that the NNPCL might need to intervene by purchasing the petrol from the Dangote refinery and reselling it to marketers at a discounted rate to ensure availability across the country. “NNPCL may have to offtake the product and manage its distribution to marketers to sell at the approved price. Without this, no marketer will be able to buy and sell the product without incurring heavy losses,” he added.
This comes as the landing cost of petrol in Nigeria was reported to be N1,117 per litre as of July 16, 2024, according to the Major Energies Marketers Association of Nigeria (MEMAN). This landing cost is significantly higher than the current pump prices, which range from N660 to N800 per litre depending on the location.
Clement Isong, Executive Secretary of MEMAN, noted that the landing cost reflects the realistic pricing of PMS and hinted that the Dangote refinery, being a business entity, would not operate at a loss. He added, “You have seen the realistic cost we published, and you know the cost at the pumps today. Dangote refinery, as a business, will not sell at a loss.”
NNPCL remains the sole importer of petrol into Nigeria, with other marketers halting imports due to difficulties in accessing the U.S. dollar needed for PMS imports. As of the time of this report, NNPCL had not responded to inquiries regarding the situation.
