Marketers Delay Lifting Dangote Petrol from NNPC Due to Pricing Disputes
September 18, 2024
Oil marketers have yet to access the petrol delivered by the Nigerian National Petroleum Company (NNPC) from Dangote Petroleum Refinery, BusinessDay has learned. The delay is attributed to unresolved pricing issues.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) reported on Tuesday that members are unable to lift petrol due to disagreements over pricing. IPMAN’s national president, Abubakar Maigandi, explained that despite Dangote Refinery’s capacity to produce petrol locally, the lack of a pricing agreement has created uncertainty in the fuel supply chain.
“We have not been supplied petrol from Dangote Refinery as we await NNPC’s resolution on pricing,” Maigandi stated.
Mohammed Lawal, a petroleum dealer with a major downstream firm, confirmed that three days after the NNPC lifted product from the refinery’s 650,000-barrels-per-day capacity, markets have not yet received the green light to obtain Dangote petrol. “We are still selling old stocks, and there remains significant uncertainty about when we will be able to access Dangote petrol,” Lawal told BusinessDay.
On September 16, NNPC released petrol pricing details, with rates ranging from N950 to N1,019 per litre depending on location. The refinery’s gantry price per ton was quoted at N736, equating to $0.55 per litre. With the official exchange rate of N1,637.59 to one dollar, NNPC calculated the cost of petrol at N898.78 per litre. Additional charges, including NMDPRA fees, inspection fees, distribution costs, and profit margins, contribute to the final price range.
The high prices have raised concerns among marketers, who worry that continued importation of petrol might be justified despite the push for local refining. A major marketer indicated that imported petrol vessels were expected to start arriving on September 17, due to the perceived lack of transparency and potential issues with product allocation from the Dangote refinery.
Femi Falana, a Senior Advocate of Nigeria, criticized NNPC’s role in setting petrol prices, arguing that it contravenes the deregulation mandate of the Petroleum Industry Act (PIA). “The market has been deregulated, meaning petrol prices should be determined by market forces rather than by the government or NNPC Ltd. The NNPC’s actions violate Section 205 of the PIA,” Falana said.
In response, Adedapo Segun, NNPC’s executive vice-president for downstream operations, explained that marketers cannot buy petrol directly from the refinery because the product is still sold at a subsidized rate. “The market value of PMS is higher than what NNPC is selling. Marketers are not buying from Dangote because the price is not cost-reflective,” Segun said. He assured that once prices are adjusted to reflect market conditions, marketers would be able to purchase directly from Dangote Refinery.
