Marketers to begin direct purchases of petrol from Dangote refinery
The major oil marketers in Nigeria are preparing to start purchasing Premium Motor Spirit directly from the Dangote Petroleum Refinery starting from this Thursday and continuing into next week, marking a significant change in the country's oil sector.
This shift comes after the Nigerian National Petroleum Company Limited decided to step back as the exclusive purchaser of the product from the $20 billion facility, as reported by The Punch.
Sources from NNPCL and the Major Energies Marketers Association of Nigeria have confirmed that the company will no longer have the exclusive rights to buy petrol from Dangote, allowing other market players to directly engage with the refinery.
In addition, reports indicate that the Nigerian Midstream and Downstream Petroleum Regulatory Authority has introduced new petrol prices, which are said to be higher than the current pump prices across various locations in the country.
George Ene-Ita, the spokesman for NMDPRA, did not confirm these developments when contacted for comment on Tuesday night. He reportedly did not respond to a text message regarding the matter at the time of this report.
Meanwhile, the oil marketers have suggested that NNPCL's decision to cease being the sole off-taker of petrol from the Dangote refinery signifies a complete withdrawal of federal subsidies on petrol.
It was previously reported in September that the Federal Government could have been incurring monthly expenditures of approximately N236 billion to subsidize petrol—both imported and sourced exclusively from Dangote by NNPCL.
This implied that NNPCL was shouldering 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, by halting its role as the sole off-taker of Dangote petrol, NNPCL stands to save a substantial amount previously allocated to subsidies, potentially easing the financial burden associated with daily subsidy costs.
Recall that the Federal Government had previously stated that only NNPC would purchase petrol from the Dangote refinery after the company began selling 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 high-ranking official from a leading oil marketing company confirmed on Tuesday that petrol dealers have not yet started purchasing petrol directly from the Dangote refinery. However, the official stressed that the NNPC is no longer the exclusive purchaser of Dangote petrol.
"It is not accurate that major marketers have commenced lifting PMS from the Dangote refinery. Instead, we were informed that the directive to start buying directly from them (Dangote refinery) was issued today (Tuesday)," the official, who spoke on the condition of anonymity because he was not authorized to speak on the matter, said.
"It was reported in the news yesterday (Monday), but it was officially stated today (Tuesday) that marketers should no longer go through NNPC, but instead, we should directly purchase from the refinery.
"However, as of today, Dangote has not announced any pricing. The important thing is that it is now official for marketers to approach the refinery and purchase petrol. The reality is that NNPC is not willing to purchase the product again at a subsidized cost for marketers. That is the implication of what has occurred, which indicates that petrol subsidy has been completely removed," the major marketer commented.
However, he pointed out that dealers had not yet adjusted their prices.
"But nobody has revised the price yet, everyone is still selling at the current price, both depots and filling stations. Perhaps they want to deplete their old stock first. This also means that any time soon, Dangote refinery may publish the price of its petrol to marketers.
"No marketer has commenced loading directly from the plant yet. It was like a rumor yesterday (Monday) that marketers were to start buying directly from the refinery, but I think it was formalized in the evening before they announced today (Tuesday) that we can purchase directly from the refinery."
Another senior official from the Major Energies Marketers Association of Nigeria confirmed the change 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 said, "We were indeed purchasing through NNPC and just in the last two weeks, we were collecting the product by trucks from Dangote refinery through NNPC. We were paying about the same amount that we had been paying NNPC for its products.
"This was the situation during the last two weeks of September. We were also purchasing 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 discuss it until we get the details. However, there is a change."
The Managing Director of another major marketing company said dealers should begin purchasing petrol directly from Dangote next week.
"I am not certain yet if some marketers have started loading directly from the plant. Maybe that will commence next week because as of now, all that has happened is that we heard that NNPC will no longer be the exclusive purchaser from the Dangote refinery.
"The last cargo we bought was through NNPC. Maybe the next time we go, they will inform 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 rush. I am sure by next week things will be clearer."
Leave A Comment