Marketers in Nigeria have clarified their stance on Dangote’s petrol supply, stating that they never intended to boycott Dangote’s petrol. This comes amidst discussions on pricing and the expected impact on the nation’s economy. The Nigerian National Petroleum Corporation Limited (NNPCL) is projected to begin lifting petrol from the Dangote Refinery, with potential implications for the price of Premium Motor Spirit (PMS) across the country.
According to sources, NNPCL, as the sole off-taker of petrol from the Dangote Refinery, plans to lift the product at a price between N960 and N980 per litre. The corporation intends to sell it to marketers at N840 to N850 per litre, enabling consumers to purchase it at the pump for an estimated N857 to N865 per litre. This pricing model suggests an average under-recovery of about N130 for NNPCL.
As of the latest market prices, petrol sold at N855 per litre at NNPCL retail stations in Lagos, marking it as the most affordable option for consumers. Major marketers are selling the product at around N920, while independent marketers’ outlets have prices exceeding N1,000. In other parts of the country, PMS prices have soared to over N1,200 per litre. The potential new pricing structure, as negotiated between NNPCL and Dangote Refinery, is seen as a measure to alleviate some of the financial strain on Nigerians.
The negotiations, which have been ongoing for more than a week, involve efforts to make petrol more affordable for Nigerians. A source from the Presidency indicated that President Bola Tinubu emphasized to the negotiating parties the importance of ensuring that the price at which petrol is sold does not impose an excessive financial burden on Nigerians. This directive is crucial given the current economic climate and the need to balance market dynamics with consumer affordability.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has expressed optimism that the new deal will reduce pressure on foreign exchange (FX) demands and help stabilize the value of the Naira. With a significant portion of FX demands (between 30% and 40%) currently allocated to the importation of PMS, the move to lift petrol locally is expected to ease this pressure. The structuring of the deal in Naira is seen as a strategic measure to mitigate FX demand, reduce unnecessary transaction costs, and improve the availability of petroleum products in the domestic market.
NNPCL’s readiness to commence lifting petrol from the Dangote Refinery is confirmed by its Chief Corporate Communications Officer, Olufemi Soneye. According to Soneye, NNPCL has already deployed trucks and vessels to the refinery in preparation for the scheduled lifting date of September 15, 2024. An initial fleet of 100 trucks has arrived at the refinery, with the number expected to increase to 300, facilitating the efficient distribution of petrol across the country.
Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) Executive Secretary, Olufemi Adewole, mentioned that while they are eager to commence lifting petrol, they are awaiting clarity on the pricing mode. Once the pricing structure is clarified, they intend to proceed in meeting the energy needs of Nigerians. This indicates a cautious approach to ensure compliance with the new pricing model and to prevent any ambiguity in the market.
The government has officially announced its plan to sell crude oil to local refineries and purchase petroleum products in Naira. This initiative, expected to reduce pressure on the Naira and improve product availability, involves the sale of about 385,000 barrels per day of crude oil to the Dangote Refinery, starting from October 1st. In exchange, the refinery will supply PMS and diesel of equivalent value to the domestic market, with PMS being exclusively sold to NNPCL, who will then distribute it to various marketers.
Analysts anticipate that this agreement will ease the severe petrol shortage in the country and potentially lower the skyrocketing prices. By ensuring a more stable supply chain and a structured pricing model, the government aims to create a more predictable market environment for consumers and marketers alike. The initiative represents a significant step towards achieving energy stability and economic balance in Nigeria.
