The Nigerian National Petroleum Company, NNPC Limited has reportedly terminated its exclusive purchase agreement with Dangote Refinery.
“Yes, it is true. We can no longer continue to bear that burden,” An official of the NNPCL told PREMIUM TIMES
The termination is expected to open the market for other marketers to buy petrol directly from the refinery at prevailing market prices.
With NNPC no longer covering the differential between Dangote’s selling price and the price to marketers, subsidies will cease to exist.
Marketers will now buy directly from Dangote and sell at cost price, adding their own differential, which may lead to a hike in the product’s price.
Also, marketers can now source products from anywhere, not just Dangote, promoting competition and potentially stabilising supply chains.
The development came after NNPC claimed in September that it was buying petrol from Dangote Refiner at N898.78 per litre and selling it to marketers at N765.99 per litre, resulting in a subsidy of nearly N133 per litre.
NNPC lifted about 103 million litres of petrol from Dangote Refinery between September 15 and 30.
The refinery was able to load 2,207 of the 3,621 trucks sent to it within the period under review.
The vehicles carried just 102,973,025 litres of the planned 400,000,000 litres of petrol earmarked to be lifted from the refinery at 25 million litres per day.
The termination comes after Devakumar Edwin, vice president of Dangote Industries Limited, announced in September that the 650,000 barrels per day Dangote Refinery has begun processing petrol and that NNPC Limited will buy its product exclusively.
NNPCL’s spokesperson, Femi Soneye, while reacting to Dangote Refinery’s claim of being undermined at the time, said it was not the sole off-taker of all products from the Dangote Refinery.
NNPC said that the Dangote Refinery and any other domestic refinery were free to sell directly to any marketer on a willing buyer, willing seller basis, which is the current practice for all fully deregulated products such as diesel, aviation fuel, and kerosene.
“The pricing of petroleum products from any refinery, including the Dangote Refinery Ltd. (DRL), is determined by global market forces. The recent changes in PMS prices have no impact on the DRL or any other domestic refinery’s access to the Nigerian market,” Soneye said.
“Furthermore, we emphasise that there is no guarantee of lower prices associated with domestic refining compared to any global parity pricing framework, as confirmed by the DRL.
