Why marketers want to weight Dangote petrol price and imported fuel

• Oil marketers have expressed the desire to purchase petrol directly from the Dangote Refinery
• The marketers said that the reason is that there is a difference between the Dangote petrol and imported PMS
• They disclosed that they no longer want to go through the NNPC for petrol supply as they have faced difficulty due to scarcity

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

Oil marketers in Nigeria will buy petrol directly from Dangote Refinery. However, they will face price challenges.

The reason is a price difference between Dangote petrol price and imported PMS.

Oil Marketers begin push to purchase petrol directly from Dangote Refinery Credit: Bloomberg/Contributor
Source: UGC

Marketers now see the NNPC as a rival

While the Dangote Refinery can supply much of Nigeria’s domestic petrol needs, the government strictly controls pricing via the Nigerian National Petroleum Company Limited (NNPC), creating a significant hurdle for marketers.

Marketers under the aegis of the Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN) have started plans to buy PMS directly from the Dangote refinery, thereby skipping NNPC.

Currently, NNPC is the sole buyer of Dangote petrol as other marketers rely on the state oil firm to obtain the product from the 650,000bpd-capacity refinery.

BusinessDay reports that IMPAN regards the NNPC as a competitor and is trying to meet with the Chairman of the Dangote Group, Aliko Dangote, or some senior refinery management.

IPMAN leaders stated that buying petrol directly from the refinery is the right step rather than buying it via other marketers.

The petroleum market is now deregulated

According to reports, Zarma Mustapha, deputy president of IPMAN, disclosed that buying petrol from the $20 billion refinery depends on the price, saying that the marketers will weigh the price and the landing cost of import and decide which is cheaper.

He disclosed that the association's operations have been complex due to the products' non-availability at the source.

He said:

“We mostly get the products from the NNPC, which is bringing it. The supply is not enough,” he said.

He said the association no longer wants to go through NNPC because the market is already deregulated. Since the marketers are interested, it should be a case of a willing buyer and a willing seller.

PETROAN official Billy Gillis-Harry said the association members want to patronise the Dangote refinery and hope to discuss the possibility.

He said PETROAN has tens of thousands of retail outlets across Nigeria and can transport petrol from the Lekki refinery.

He said:

“It’s very critical for him to work with us directly so that Nigerians can be the best for it.”

Landing cost crashes

Legit.ng earlier reported that the landing cost of petrol has dropped to N981 per litre, according to data from the Major Energy Marketers Association of Nigeria (MEMAN).

The landing cost of petrol hovered around N1,130 per litre in recent weeks but dropped by over N140 as of September 25, 2024, due to a drop in global crude oil prices.

IPMAN and PETROAN said the associations would continue to source petrol from other suppliers, including NNPC, if Dangote’s price is not competitive.

Energy policy analyst Adeola Yusuf said that it will be challenging for marketers to directly purchase the product from a refinery after choosing the NNPC as the sole off-taker of its product.

Remember the bickering and the back-and-forth between Dangote and NNPC? Due to prices, the NNPC wanted to back out of its deal with Dangote.

"NNPC emerged as the sole off-taker of the product for two reasons. One is that the company has the facility to store the product and the infrastructure to supply it to the end user."Another reason is that the government subsidises the product because it is slightly higher than the market price at the time.," he said.

NNPC crashes Dangote petrol price

Legit.ng earlier reported that many oil marketers have begun purchasing products from the national oil firm, confirming NNPC's statement that independent marketers still need to afford Dangote petrol due to its high cost.

Findings show that 11Plc, TotalEnergies, AA Rano, and other independent marketers have begun lifting Dangote petrol via the Nigerian National Petroleum Company (NNPC) Trading Limited to retail outlets nationwide at N765.99 per litre.

According to reports, some petroleum marketers who completed payments on the NNPC trading portal began lifting petrol earlier this week, according to the existing agreement between marketers and the refinery.

Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng

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Source: Legit.ng