Dangote Refinery May Shift to Petrol Exports as NNPC Declines Sole Purchasing Agreement
The Dangote refinery is considering exporting its Premium Motor Spirit (petrol) due to the Nigerian National Petroleum Company Limited’s (NNPC) refusal to be its exclusive buyer.
In a statement on Saturday, NNPC spokesman Olufemi Soneye announced that the company would not purchase fuel from Dangote unless it was priced lower than international market rates. This contradicts claims made by Aliko Dangote, President of the Dangote Group, who stated that the refinery was awaiting product rollout from NNPC.
The NNPC further clarified that it would only fully offtake petrol from the refinery if the market prices of PMS exceeded the pump prices in Nigeria.
MNNPC Affirms Freedom for Dangote and Domestic Refineries to Sell Directly to Marketers
The Nigerian National Petroleum Company Limited (NNPC) has stated that Dangote and other domestic refineries are free to engage in direct sales to any marketers on a willing buyer-willing seller basis, emphasizing that it has no intention of acting as a distributor in a free market environment.
This announcement comes in response to a press release from the Muslim Rights Concern (MURIC), which alleged that the NNPC was undermining the Dangote refinery.
MURIC expressed concerns that recent adjustments to petrol pump prices by the NNPC would hinder the refinery’s ability to offer competitive pricing, claiming that the corporation had effectively become the sole offtaker for all products produced by the refinery.
In response, the NNPC stated, ‘The pricing of petroleum products from any refinery, including Dangote Refinery Limited, is determined by global market dynamics.
Recent adjustments to Premium Motor Spirit (PMS) prices do not affect DRL or any other domestic refinery’s ability to access the Nigerian market. In fact, if prices are perceived as high, it creates an opportunity for the refinery to offer its products at lower prices in Nigeria.
Moreover, we stress that there is no assurance of lower prices from domestic refining compared to any global parity pricing framework, as acknowledged by the DRL itself. The NNPC Ltd will only fully offtake PMS from the DRL if market prices exceed the pump prices in Nigeria. The DRL, along with other domestic refineries, is free to sell directly to any marketer on a willing buyer, willing seller basis, which is the standard practice for all fully deregulated products. The NNPC Ltd has no intention of acting as a distributor for any entity in a free market setting, making the idea of being a sole off-taker irrelevant.’
Soneye further emphasized that the NNPC could not
undermine a business in which it has invested billions of dollars.
During the unveiling of the 650,000-barrel capacity refinery on Tuesday, Dangote announced that the facility is prepared to begin petrol distribution as soon as the NNPC is ready.
He indicated that petrol would be delivered to filling stations within 48 hours (from Tuesday) once all arrangements with the NNPC are finalized, assuring that the current queues would soon come to an end.
“Our Premium Motor Spirit (PMS) could reach filling stations within the next 48 hours, depending on the NNPCL,” he stated.
He elaborated, “We are prepared, and I hope that within the next few days, we will see an end to petroleum queues as soon as we finalize arrangements with NNPC. We are ready and waiting for them, and I hope they will be ready very soon.”
Dangote also informed reporters that he could not disclose the petrol pricing, as it is controlled by the NNPC.
“Regarding pricing, I cannot provide any details because we do not control it. Currently, it is managed by the NNPC, not by Dangote. We will wait for them. Our priority right now is to ensure product availability and to eliminate round-tripping,” he said.
The businessman stressed that the NNPC would be responsible for selling and distributing the product under the current naira crude sale arrangement.
“Once the NNPC is ready, we can proceed. We are even prepared to load a ship this week,” he added.
