In a significant shift within Nigeria’s oil sector, major oil marketers are set to begin direct purchases of Premium Motor Spirit from the Dangote Petroleum Refinery from this Thursday and continuing into next week.
This development follows the Nigerian National Petroleum Company Limited’s decision to withdraw as the exclusive off-taker of the product from the $20 billion facility, according to The Punch.
Sources within NNPCL and the Major Energies Marketers Association of Nigeria confirmed that the company will no longer have sole rights to purchase petrol from Dangote, paving the way for other market players to engage directly with the refinery.
Additionally, reports suggest that the Nigerian Midstream and Downstream Petroleum Regulatory Authority has introduced new petrol prices, which are reportedly higher than the current pump prices across various locations in the country.
The spokesman for the, NMDPRA, George Ene-Ita, did not confirm the developments when reached for comment on Tuesday night.
He was reported not to respond to a text message regarding the matter at the time of this report.
Meanwhile, the Oil marketers have indicated that the NNPCL decision to cease being the sole off-taker of petrol from the Dangote refinery signals a complete withdrawal of federal subsidies on petrol.
Recall it was reported in September that the Federal Government could have incurred monthly expenditures of approximately N236 billion to subsidize petrol—both imported and that sourced exclusively from Dangote by NNPCL.
This suggested that NNPCL was bearing a subsidy cost of about N3.3 billion daily on Dangote petrol, translating to a potential monthly subsidy of around N99 billion to marketers.
However, halting its role as the sole off-taker of Dangote petrol, the NNPCL stands to save a substantial amount previously allocated to subsidies, potentially alleviating the financial burden associated with daily subsidy costs.
Recall that the Federal Government had stated severally that only NNPC would off-take petrol from Dangote refinery after the company commenced the sale of PMS in September.
While stating that crude would be sold to Dangote in naira from October 1, the government, through the Federal Ministry of Finance in a recent statement, said, “In return, the Dangote refinery will supply PMS (petrol) and diesel of equivalent value to the domestic market to be paid in naira.
“Diesel will be sold in naira by the Dangote refinery to any interested off-taker. PMS will only be sold to NNPC. NNPC will then sell to various marketers for now. All associated regulatory costs (NPA, NIMASA, etc.) will also be paid in naira. We are also setting up a one-stop shop that will coordinate service provision from all regulatory agencies, security agencies, and other stakeholders to ensure a smooth implementation of this initiative.”
A very senior official from a major oil marketing firm confirmed on Tuesday that dealers have not yet begun direct purchases of petrol from the Dangote refinery. However, the official emphasized that the NNPC has officially ceased to be the sole off-taker of Dangote petrol.
“It is not true that major marketers have started lifting PMS from the Dangote refinery. Rather we were made to understand that the directive to start buying directly from them (Dangote refinery) was given today (Tuesday),” the official, who spoke on condition of anonymity because he was not authorised to speak on the matter, stated.
“It was in the news yesterday (Monday), but it was formally stated today (Tuesday) that marketers should not go through NNPCL again, rather we should go straight to buy from the refinery.
“However, as of today, Dangote has not come up with any price. The main thing is that it is now official that marketers can now approach the refinery and buy petrol. The truth is that NNPCL is not ready to buy the product again at a subsidised cost for marketers. That is the implication of what has happened, which means that petrol subsidy has been removed completely,” the major marketer stated.
He, however, noted that dealers had yet to review their prices.
“But nobody has reviewed the price yet, everyone is still selling at the prevailing price, both depots and filling stations. Maybe they want to exhaust their old stock first. This also means that any time from now Dangote refinery may release the price of its petrol to marketers.
“No marketer has started loading directly from the plant yet. It was like a rumour yesterday (Monday), that marketers were to start buying directly from the refinery, but I think it was formalised in the night before they came out today (Tuesday) to say that we can buy directly from the refinery.”
Another senior official from the Major Energies Marketers Association of Nigeria confirmed the shift in purchasing petrol from Dangote by downstream operators.
When asked if major marketers had begun buying petrol directly from the Dangote refinery and at what cost, the MEMAN official stated “We were indeed buying through NNPC and just last two weeks we were picking the product by trucks from Dangote refinery through NNPC. We were paying about the same amount that we had been paying NNPCL for its products.
“This was the position during the last two weeks of September. We were also buying from them from their imported stock to store in our tank farms. Now we know that there’s something new that is coming as we read in the news. But I wouldn’t want to speak about it until we get the details. However, there is a change.”
The Managing Director of another major marketing company said dealers should start buying petrol directly from Dangote next week.
“I am not sure yet if some marketers have started loading directly from the plant. Maybe that will start next week because as of now, all that has happened is that we heard that NNPCL will no longer be the sole off-taker from the Dangote refinery.
“The last cargo we bought was through NNPCL. Maybe the next time we go, they will tell us that we have to go to the Dangote refinery directly. These things take a bit of time. People shouldn’t be in too much of a hurry. I am sure by next week things will be clearer.”
