On Tuesday, oil marketers affiliated with the Independent Petroleum Marketers Association of Nigeria (IPMAN) indicated that unresolved pricing disputes are a significant factor preventing their members from accessing Dangote petrol from NNPC.
Abubakar Maigandi, the national president of IPMAN, emphasized that although the refinery has the capability to produce petrol domestically, marketers are hindered by the absence of a pricing agreement, resulting in uncertainty within the fuel supply chain.
“We have not been supplied petrol from Dangote Refinery as we wait for the NNPC on pricing,” he said.
Petroleum dealer Mohammed Lawal, affiliated with a prominent downstream company, reported that markets have not yet received authorization from the Nigerian National Petroleum Corporation (NNPC) to distribute Dangote petrol, despite the product being lifted from the 650,000-barrels-per-day (bpd) refining facility three days ago.
“We are still selling old stocks of petrol. There is still so much uncertainty about pricing or when we will lift Dangote petrol,” Lawal said.
On Monday, September 16, NNPC announced the pricing details for petrol, commonly referred to as premium motor spirit (PMS), produced by the Dangote Petroleum Refinery.
The prices, which vary from N950 to N1,019 per litre based on location, elicited responses from both the oil industry and the private sector. The gantry price per ton at the refinery was reported to be N736, translating to approximately $0.55 per litre.
According to the official exchange rate of N1,637.59 to one dollar, NNPC indicated that the cost of one litre of petrol is N898.78. NNPC further explained that, in addition to the landing cost from refineries, suppliers are required to pay various statutory and regulatory fees.
These include the NMDPRA fee of N8.99, an inspection fee of N0.97, a distribution cost of N15.00 in Lagos, and a profit margin of N26.48. These charges must be added to the product's landing cost to arrive at the price range of N950 to N1,019 per litre.
Oil marketers have voiced concerns that these elevated prices may lead to continued petrol imports into Nigeria, despite ongoing initiatives to enhance local refining capabilities.
A prominent marketer disclosed that shipments of imported petrol are anticipated to begin arriving in Nigeria on Tuesday, September 17.
“This is because for whatever is going to come out of Dangote refinery, it is either there will not be enough transparency in the allocation of the product or there will be other issues.
“Also, some big players may not get enough quantity from the plant and they will have to complete this with imported products. Like I told you, all things being equal, from September 17 (yesterday), PMS vessels by marketers, not NNPC, should start coming into the country,” he said.
The Senior Advocate of Nigeria, Femi Falana, has expressed concerns regarding the legality of the state oil company, NNPC, determining petrol prices after deregulation. On Tuesday, Falana asserted that this action contravenes Section 205 of the Petroleum Industry Act (PIA).
According to him, “The market has been deregulated, meaning that petrol prices are now determined by market forces rather than by the government or NNPC Ltd. Additionally, the exchange rate plays a significant role in influencing these prices.
“The action of the NNPC is a violent contravention of Section 205 of the PIA, which stipulates that the prices of petroleum products shall be determined by market forces,” Falana said.
Product sold at subsidised rate – NNPC
On Monday, Adedapo Segun, the executive vice-president of downstream operations at NNPC, stated that marketers are unable to buy petrol directly from the refinery due to the fact that the product is still being offered at a subsidized price.
“That is the same thing happening with Dangote. I said earlier that Dangote is a company and it will sell at market price,” he said.
“The market value of PMS is still higher than the N766 or N765 or N799 that NNPC is selling.
“So, there is no way the marketers would bring it in. There’s no way the marketers would also buy from Dangote.
“The situation has not changed there. So, NNPC’s off-taking is only because the others would not buy at the price Dangote will be willing to sell, which is reasonable.
“As soon as the price allows for it, you will see the marketers go to Dangote and buy.
“So, instead of saying NNPC is the only off-taker, let’s put it this way: NNPC is the only entity that is willing to off-take because NNPC has a role under the law to be the energy provider of the resort.”
Segun explained that this decision is not intended to marginalize other marketers, as evidenced by NNPC's plan to supply crude to Dangote while receiving payment in naira.
He added that once petrol prices align with market costs, all other marketers will have the opportunity to purchase the product.