NNPCL, Dangote Disagree Over Price Of Petrol

BY NSE ANTHONY-UKO, CHIKA IZUORA and OLUSHOLA BELLO

The Nigerian National Petroleum Company Limited (NNPCL) and the Dangote Refinery have sharply disagreed over the pricing of Premium Motor Spirit (PMS) produced from the Refinery.

The national oil company had said yesterday that the Refinery was selling petrol at N898 a litre, but Dangote Refinery has denied the report, saying the price for its product had not yet been set.

NNPCL spokesman Femi Soneye had told LEADERSHIP that the company had so far loaded 70 trucks of the product from the refinery at the above price.

However, Dangote Refinery last night refuted the claim made by the NNPCL spokesperson: It clarified that it does not sell petrol at the alleged rate of N898 per litre, labelling the assertion as “misleading and mischievous.”

Dangote’s group chief branding and communications officer, Anthony Chiejina, said in a statement that the false claim was an attempt to undermine the significant progress in addressing Nigeria’s long-standing energy challenges.

He urged the public to disregard the claims and await an official announcement from the Technical Sub-Committee on Naira-based crude sales, set to begin operations on October 1, 2024.

Chiejina highlighted that the refinery has sold its products in dollars, offering substantial savings compared to current import prices.

He assured Nigerians that the refinery’s operations would ensure petrol availability across all local government areas, effectively combating fuel scarcity in the country.

NNPCL spokesman Soneye had earlier said:

“We successfully loaded PMS today at the Dangote Refinery. The report stating that we purchased it at N1,300 per litre is false. For this initial loading, the price was N898 per litre. In response to your inquiry, I can also confirm that we will receive 16.8 million litres. As of now, we have loaded over 70 trucks,” Soneye told our Correspondent.

However, reacting to the situation, Henry Adigun said that the one-off-taker policy leaves everything in doubt about the sincerity of the entire process.

Adigun said every transaction here is shrouded in secrecy, including pricing, stating that the lack of policy harmonisation is in total breach of the Petroleum Industry Act (PIA), which demands a free market and free pricing for products.

For his part, Elder Chinedu Okoronkwo, former national president of the Independent Petroleum Marketers Association of Nigeria (IPMAN), appealed for a sustainable supply strategy to enable members to access products and ensure proper distribution across the country.

Okoronkwo, now IPMAN (BoT) treasurer, said the association controls 80 per cent of the market and excluding them would continue to create a gap in the market.

An industry source who spoke to our correspondent but wanted to remain anonymous said NNPC is promoting a monopoly in the market by accepting to be the only off-taker.

Our source said the company is trying to justify its investment and selling crude to Dangote Refinery in Naira by creating a monopoly. The source said other marketer associations have been excluded in the process, which would not help investment in the sector.

She said the 300 trucks earlier deployed to Dangote Refinery to access petrol belonged to members of the Major Energy Marketers Association of Nigeria (MEMAN), which comprised Ardova, TotalEnergies, NNPC retail, NipCo, MRS, 11Plc, each contributing 50 trucks of 33,000 litres. The source also said it was learnt that the number of trucks increased to 500.

Meanwhile, LEADERSHIP reports that Dangote has not reached out to members of the Depot and Petroleum Marketers Association of Nigeria (DAPP MAN) to take products.

Our correspondent learnt that the DAPPMAN group would reject any invitation urging members to load from Dangote Refinery gantry.

“DAPPMAN members operate efficient depot facilities with loading gantries and would prefer to load products in vessels and take them to different locations and states, empty them into their depots, and sell to marketers

“Except such arrangements are considered, the Association may resort to importation because they equally do not see competitive pricing from the refinery,”  the source said.

Nigeria has been relying heavily on tankers to transport petrol instead of pipelines, a practice that accounts for approximately 80 per cent of the country’s petroleum movements.

This dependence has led to significant operational challenges, including frequent accidents, delays at security checkpoints, and the deterioration of road infrastructure, which collectively threaten the efficiency and safety of fuel distribution.

However, critical infrastructure challenges, such as pipeline damage and vandalism, have rendered them inoperative due to vandalism and theft, which have plagued the oil sector for decades.

Analysts have maintained that this strategy is unsustainable and called for a diversified transportation approach, including the development of rail and pipeline systems, which could alleviate road congestion and enhance safety.

LEADERSHIP checks revealed that approximately 80 per cent of petroleum transportation occurs via road trucks, primarily due to the country’s inadequate pipeline infrastructure and the need for flexibility in distribution. Despite having a network of pipelines, logistical challenges such as poor road conditions, mechanical issues, and delays at police checkpoints hinder efficient transport.

The reliance on trucks has increased significantly, with around 10,000 tankers operating nationwide. However, 80 percent of these vehicles lack essential safety features, raising risks during transportation. The rising costs associated with trucking—exacerbated by inflation and foreign exchange issues—have also impacted the downstream oil sector, leading to a dramatic increase in the cost of transporting petrol, from N7 million in May to N25 million recently.

Marketers Lift 518,500MT of Diesel, Jet A1 from Dangote

Meanwhile, investigations have shown that petroleum marketers have lifted 518,500 metric tonnes of automotive gas oil (AGO) and Jet A1 from Dangote Refinery (DR), representing 60 percent of the national truck-out in five months.

This contradicts comments credited to Dangote Refinery indicating that local petroleum marketers were yet to patronise its Refinery.

Documents sourced from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) showed that Independent local marketers, including Asharami, MRS Oil and Gas, AA Rano,  Rainoil, Prudent, NIPCO, Aym Shafa and Danmarna, among many others, have patronised Dangote Refinery over the past months, a development the marketers say reinforces their commitment to ensuring seamless access to petroleum products across the nation.

Further analysis of the transactions which occurred between April and September showed marketers lifted 489,500 MT of AGO and 29,000 MT of Jet A1 distributed across various Nigerian ports, with 17 AGO shipments sent to Lagos, 6 to Warri, 2 to Port Harcourt, and 1 to Calabar. All three Jet A1 shipments were discharged in Lagos.

The marketers, however, said the lack of clarity surrounding the availability of Dangote Refinery’s Premium Motor Spirit (also known as petrol), remained a stumbling block to patronage within the local market.

According to Olufemi Adewole, executive secretary of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), the sector needs to operate transparently, giving all stakeholders the opportunity to thrive and contribute significantly to ensuring the ‘availability, reliability and accessibility of petroleum products nationwide.’

Adewole said the alleged boycott of Dangote Refinery’s PMS was incorrect as petroleum marketers were still awaiting clearance from the government on the modalities regarding the offtake of PMS from the refinery.

“DAPPMAN, as evidenced by patronage of various products from the Dangote Refinery by its members, believes firmly in meeting Nigeria’s energy needs and remains aligned to calls for the nation not to end up in a monopoly, which will only jeopardise our economic growth and development,” he said.

Adewole noted that DAPPMAN and other marketers had consistently stated that the trading of petroleum products globally rests on the critical issues of price and quality, saying, “Offtake will, in keeping with the laws of demand and supply, gravitate towards sources where products can be bought at a lower price, better quality, and seamless accessibility.”

He reassured Nigerians that DAPPMAN would continue to work assiduously to give the nation top-notch fuel solutions while securing the sector’s sustainability.

Meanwhile, reacting to the development, the director/CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, stated that the lifting of fuel from Dangote Refinery would improve backward integration by the manufacturing sector, particularly those who use a lot of petrochemical raw materials.

“This will help the backward integration agenda of our industrialisation as we will see many jobs being created along the entire chain. We are likely to see an improvement in backward integration in our manufacturing sector, particularly for those using many raw petrochemical materials. This will help the backward integration agenda of our industrialisation as we will see many jobs created along the entire chain,” he added.

As for pricing, Yusuf explained that this will depend on the agreement between NNPC and Dangote Refinery, saying, ‘For now, the price has not been fully deregulated; the government is still providing some subsidy even despite the recent review.’

According to him, it is good news that the NNPC has commenced lifting petrol from the Dangote Refinery.

“If that is an indication that the issues between them or the disagreement between them is being resolved, then that is a very good development.

“As for the implications, we expect to see an improved supply of petrol for the country because the logistics and importation challenges will be removed.

“The challenge of logistics will now be limited to domestic logistics, which I think we should be able to manage better, so we expect that the domestic supply of petroleum products should improve, but again, this will be dependent on how steadily the supply of a feedstock talking of the crude oil is available to the Dangote refinery.

“If there is a steady supply of crude to the refinery, especially from the NNPCL, we are not likely to see any major hitches regarding supply. The only hitches you may experience may be domestic distribution within the country.

“This lifting of petrol from NNPC also will ease the pressure on our foreign exchange market because the importation of petrol has been exerting a lot of pressure on our forex market and contributing to the exchange rate of the country’s depreciation. This will also translate to an improvement in our foreign reserves and help to stabilise our macroeconomic environment,” he said.