Why marketers may ditch Dangote petrol for alternatives

• Independent marketers may ditch plans to buy petrol from the Dangote Refinery following the slowdown in talks between the refinery and NNPC
• The marketers also disclosed that they hinged their plans on a statement of not wanting to be the off-taker for Dangote petrol
• Per the marketers, they may resort to petrol imports if talks between NNPC and Dangote fail to progress meaningfully

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

Oil marketers may ditch the $20 billion Dangote Refinery and start importing petrol, following the recent statement by the Nigerian National Petroleum Company Limited (NNPC) that it would only offtake the product from the refinery if the market prices of the newly launched commodity were higher than the pump prices in Nigeria.

The national oil firm also stated that Nigeria's world’s single-train refinery and other facilities are free to sell directly to any marketer on a willing buyer, willing seller basis.

Marketers disclose plans to ditch petrol from Dangote Refinery Credit: Bloomberg/Contributor
Source: UGC

NNPC and Dangote slowing down talks

The NNPC said it has no plans to become the distributor for any entity in a free market.

The NNPC statement contradicts the President of Dangote Group, Aliko Dangote, who disclosed during the presentation of petrol from the refinery that the company was waiting for the NNPC, stating that the oil regulator will be the sole local distributor of its petrol.

Oil marketers who reacted to the slowdown in discussions between Dangote and the NNPC said they would only source the product from wherever they find it cheaper.

The National Operations Controller of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mustapha Zarma, said IMPAN has not contacted Dangote but disclosed that the association will contact the refinery's sales department this week.

Marketers give conditions for buying Dangote petrol

Zarma disclosed that if the price from the refinery is competitive enough, IPMAN members will patronise the refinery whether or not the NNPC distributes it.

He said that since the Nigerian government and NNPC said the Dangote Refinery would sell its product at the market price, the implication is that the government will not interfere in the commodity’s pricing in the form of a subsidy.

The IPMAN top shot noted that other dealers now have the chance to source the product from any producer at a lower price, locally or internationally.

According to a Punch report, Zarma said that some oil marketers currently import diesel, while others buy from Dangote, stating that a similar scenario may repeat in petrol purchases.

He eased the fear of monopoly by the refinery, saying that the government would want a competitive environment where demand and supply dictate the market prices.

NNPC clears marketers to lift Dangote petrol

Legit.ng previously reported that following the NNPCL's statement that it is not the only off-taker for Dangote and other local refineries, independent marketers are free to lift petrol directly from the Dangote refinery.

The Dangote Refinery launched its petrol into the Nigerian market on September 3, 2024. Still, marketers have been unable to lift the product from the 650,000bdp-capacity refinery as talks between the refinery management and the NNPC are ongoing.

NNPC moves to resolve petrol scarcity

Also, on Thursday, September 5, 2024, the NNPC disclosed that it was working hard to resolve the country's current petrol scarcity. 

NNPC’s vice president of Downstream Operations, Dapo Segun, blamed the shortages on forex liquidity, distribution challenges, and the need to balance imports with existing debts.

He did not provide a specific date for ending the petrol scarcity, which has caused long queues at filling stations.

Dangote to set own petrol prices

Legit.ng earlier reported that there are signs that the Nigerian government is considering granting the Dangote Refinery the autonomy to set petrol prices.

According to a Bloomberg report on Thursday, September 5, 2024, the Nigerian government is considering letting the facility set the price at which it sells petrol to Nigerians.

The report quoted sources as saying that Nigeria will allow Dangote to set petrol prices for marketers starting October, the same month the Nigerian government will sell crude oil to domestic refineries in the local currency.

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Source: Legit.ng