Marketers can now buy petrol from Dangote, other refineries directly – Nigerian govt

The most significant change under the new regime is that petroleum product marketers can now purchase petrol directly from local refineries, the government said.

The Nigerian government on Friday said petroleum product marketers can now purchase petrol directly from local refineries.

This marks a departure from the previous arrangement where the Nigerian National Petroleum Company Limited (NNPC Ltd) served as the sole purchaser and distributor of petrol from the refineries, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said in a statement on Friday.

Earlier on Monday, this newspaper exclusively reported that NNPC Ltd is ending its exclusive purchase agreement with Dangote Refinery, opening up the market for other marketers to buy petrol directly from the refinery.

This means the NNPC will no longer be the sole off-taker, and marketers can now negotiate prices directly with Dangote Refinery. This development aligns with the current practices for fully deregulated products, where refineries can sell directly to marketers on a willing buyer, willing seller basis.

Last Saturday, the Nigerian government said it has officially commenced the sale of crude oil and refined petroleum products in Naira. The sale in Naira took effect from 1 October, the government said at the time.

In his statement on Friday, the Minister of Finance and Chairman of the Naira-crude sale implementation committee, Mr Edun, provided an update on the initiation of crude purchase and product sales in naira transactions.

The committee, chaired by Mr Edun, held its second review meeting on 10 October to assess the transition towards a deregulated market structure for petrol and address the change in the purchasing model for petroleum product marketers.

According to the statement, the direct purchasing mechanism allows marketers to negotiate commercial terms directly with the refineries, fostering a more competitive market environment and enabling a smoother supply chain for petroleum products.

“New Direct Purchase Model: The most significant change under the new regime is that petroleum product marketers can now purchase petrol directly from local refineries,” the statement said.

“This marks a departure from the previous arrangement where the Nigerian National Petroleum Corporation (NNPCL) served as the sole purchaser and distributor of PMS from the refineries.

“Local Production of petrol: With the commencement of local petrol production, the market is better equipped to support these direct transactions. This transition is expected to enhance efficiency in product availability and stabilise market conditions for the benefit of all Nigerians.”

The committee said it recognises that there are questions and discussions regarding this change in the market structure.

“We are committed to providing clarity on this development and will continue to engage with stakeholders to ensure a seamless transition process,” the statement said.

Background

The NNPC had claimed in September that it was buying petrol from Dangote Refinery at N898.78 per litre and selling to marketers at N765.99 per litre, shouldering a subsidy of almost N133 per litre. However, the company said this arrangement is no longer sustainable.

The NNPC lifted about 103 million litres of petrol from Dangote Refinery between September 15 and 30. The refinery was able to load 2,207 of the 3,621 trucks sent to it within the period under review.

The vehicles carried just 102,973,025 litres of the planned 400,000,000 litres of petrol earmarked to be lifted from the refinery at 25 million litres per day. That translated to just 26 per cent performance, records seen by PREMIUM TIMES show.

With the NNPC ending its exclusive purchase agreement with the Dangote Refinery, the company will no longer be the sole off-taker, and marketers can now negotiate prices directly with the refinery.

However, on Wednesday, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, told PREMIUM TIMES that the association’s members had yet to start loading petrol from Dangote Refinery.

“We have not started off-taking from Dangote. But now that the NNPC has said they are no longer the sole off-taker, we will continue our discussion with Dangote.

“Our discussion with Dangote will also reach the concluding stage by the end of this week; independent marketers will come out with the price Dangote is giving to us. We are still loading from NNPC. We are waiting for Dangote to come out with their price and that will also allow us, the independent marketers, to effect our price,” Mr Ukadike said.