The Nigerian National Petroleum Company Limited (NNPC) is terminating its exclusive purchase agreement with Dangote Refinery, paving the way for other marketers to buy petrol directly from the refinery as the sole off-taker. Marketers can now negotiate prices directly with Dangote Refinery.
This shift aligns with current practices for fully deregulated products, where refineries can sell directly to marketers on a willing buyer, willing seller basis.
In September, Devakumar Edwin, vice president at Dangote Industries Limited, announced that the 650,000 barrels per day Dangote Refinery had commenced petrol processing.
In response to concerns that Dangote Refinery Limited was being undermined, the NNPC clarified it was not the only off-taker for all products from the refinery, asserting that Dangote was free to sell petrol to any marketer.
The NNPC reiterated that both Dangote Refinery and other domestic refineries were at liberty to sell directly to any marketer under the willing buyer, willing seller model, which is standard for fully deregulated products like diesel, aviation fuel, and kerosene.
However, on September 15, the NNPC started loading petrol from the Dangote Refinery.
While some major petroleum marketers were later reported to have been approved to lift the product under an agreement with NNPC Ltd, independent marketers remained excluded.
On September 26, the House of Representatives called on the federal government to require NNPC Ltd and Dangote Refinery to permit independent marketers to lift petrol directly from the refinery.
The lower chamber also urged Dangote Refinery’s management to construct, acquire, or partner in establishing tank farms or depots across the country’s geopolitical zones to facilitate public access to petroleum products.
This motion followed an urgent public concern raised by Oboku Oforji (PDP, Bayelsa).
While presenting the motion, Mr. Oforji articulated that the exclusion of independent marketers jeopardized competition in the sector. He emphasized that competition is crucial for lowering costs and warned that some marketers might resort to importing products to survive.
“NNPCL and the major marketers being the exclusive off-takers spells monopoly, which is tantamount to greed. This is the same NNPC Ltd that has failed to manage our crude resources and refineries for decades,” the lawmaker stated.
Insiders noted that NNPC is poised to step back as the sole off-taker, allowing other marketers to purchase petrol directly from Dangote Refinery at prevailing market prices, thus fostering competition and potentially stabilizing supply chains.
Femi Soneye, the NNPC spokesperson, was not immediately available for comment, but a senior company official confirmed the development on Monday morning.
“Yes, it is true,” the official stated. “We can no longer continue to bear that burden.”
The NNPC had claimed in September it was purchasing petrol from Dangote Refinery at N898.78 per litre and selling it to marketers at N765.99 per litre, absorbing a subsidy of nearly N133 per litre.
Between September 15 and 30, the NNPC lifted approximately 103 million litres of petrol from Dangote Refinery. During this period, the refinery managed to load 2,207 of the 3,621 trucks sent to it, delivering a total of just 102,973,025 litres of the planned 400,000,000 litres earmarked for lifting at a daily target of 25 million litres, translating to only 26 percent of expected performance, according to records seen by PREMIUM TIMES.
Implications
NNPC’s withdrawal as the sole off-taker of Dangote petrol signals a crucial move toward full market liberalization, enabling marketers to source products directly from Dangote Refinery or other suppliers.
With NNPC no longer covering the price differential between Dangote’s selling price and the price to marketers, subsidies will cease.
Marketers will buy directly from Dangote and sell at market price, adding their margins, which may lead to an increase in fuel prices.
Additionally, marketers can now acquire products from various suppliers, not solely Dangote, fostering competition and potentially stabilizing supply chains.
