Dangote Refinery Commences Direct Petrol Sales to Marketers

Dangote Sells Petrol Direct

“We had a fruitful discussion with the group...”

Fuel deregulation gains momentum: Dangote Refinery sells petrol directly, awaits official price announcement.

The Dangote Petroleum Refinery has commenced direct supply of Premium Motor Spirit (PMS), or petrol, to select oil marketers, bypassing the Nigerian National Petroleum Company Limited (NNPCL). This move marks a significant shift in Nigeria's fuel distribution landscape.

As the refinery ramps up production, numerous oil marketers are seeking direct purchases, while others continue importing petrol. Notably, hundreds of millions of litres of imported petrol are expected to arrive shortly.

Between October 18-20, at least four vessels carrying imported petrol docked at Nigerian seaports. According to Nigerian Ports Authority documents, approximately 123.4 million litres were offloaded at two ports to boost national fuel availability.

Pointers

• Dangote Refinery supplies petrol directly to oil marketers
• Many marketers seek direct purchases; others continue importing
• 123.4 million litres of imported petrol offloaded at Nigerian ports
• Hundreds of millions more litres expected within two weeks

This development indicates a changing fuel supply dynamics in Nigeria, with Dangote Refinery playing a pivotal role.

Amid ongoing fuel imports by major oil marketers, some have started sourcing petrol directly from Dangote's Lekki refinery, heralding a new era in Nigeria's fuel supply chain.

A senior official at Dangote Refinery confirmed that the facility now sells petrol directly to marketers on a willing-buyer, willing-seller basis, marking a significant shift in the country's fuel distribution landscape.

He also affirmed that Dangote Refinery has confirmed that oil marketers are now purchasing Premium Motor Spirit (PMS), also known as petrol, directly from the refinery. “Marketers are already coming to the refinery to lift PMS. They are lifting directly from the refinery, not through a third party,” the official revealed, speaking on condition of anonymity.

The source declined to disclose the exact price at which marketers are obtaining the product but stressed that oil dealers would only engage in purchasing if the price is competitive and favorable to their business interests. “We have reached agreements with some of the marketers and more are still ongoing. I don't know the exact price, but if the price is not good, the marketers would not be coming to us,” the official emphasized.

According to the official, the situation is improving, particularly with the Federal Government now supplying crude oil to the refinery. This development has enhanced the refinery's ability to produce and supply PMS to marketers.

A Dangote Refinery official revealed that to meet the surging demand for petrol domestically and internationally, the facility has strategically allocated 53% of its crude oil supplies towards petrol production. “This could be reviewed in future if demand for other finished products increases beyond petrol demand, but currently, about 53% of our crude is dedicated to petrol production, with other products accounting for the remaining percentage,” the official explained.

Confirming the direct purchase of petrol from Dangote Refinery, bypassing the Nigerian National Petroleum Company Limited (NNPCL), a prominent major marketer affirmed, “Yes, oil marketers have started buying petrol directly from the refinery.” This development underscores a significant shift in Nigeria's fuel supply dynamics.

A prominent major marketer confirmed that oil marketers are purchasing petrol directly from Dangote Refinery, bypassing the Nigerian National Petroleum Company Limited (NNPCL). “Yes, everyone is in the process. This was advised that it would happen soon and is a normal business transaction,” the source stated.

This development contradicts earlier claims suggesting the refinery couldn't sell petrol to marketers without dissolving its agreement with NNPCL. Initially, Dangote Refinery announced NNPCL as the exclusive off-taker of its petrol starting September 15.

However, a refinery insider revealed that this arrangement was mandated by the Federal Government. The source expressed surprise when, on October 11, the Technical Subcommittee on Domestic Sale of Crude Oil in Local Currency declared marketers could purchase petrol directly from the refinery.

“Following the committee's announcement, industry operators acknowledged that the market had been fully deregulated, and they planned to approach the refinery to apply for lifting petrol.”

Industry operators confirm Nigeria's petroleum market has been fully deregulated, following the Technical Subcommittee's announcement. This development has prompted operators to seek direct petrol purchases from Dangote Refinery.

In a significant move, Hammed Fashola, Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), led a delegation to meet Devakumar Edwin, Vice President of Dangote Industries, in Lagos. The meeting aimed to explore potential collaborations and petrol supply agreements.

Although Fashola didn't divulge meeting details, he praised Edwin for his substantial contributions to the industry. This gesture underscores the growing partnership between IPMAN and Dangote Industries.

Highlights:

• Nigeria's petroleum market fully deregulated
• Industry operators to purchase petrol directly from Dangote Refinery
• IPMAN delegation meets Dangote Industries' Vice President
• Collaboration and supply agreements discussed.

“Edwin received us very well and promised to make things easier for IPMAN to do business with Dangote,” he said.

Fashola added, “We had a fruitful discussion with the group. We have started discussing modalities and other logistics. IPMAN has agreed to work with Dangote. We hope very soon we will start lifting products from the facility.”

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has stipulated that it cannot commence immediate off-take of petrol from Dangote Refinery unless the refinery terminates its existing contract with the Nigerian National Petroleum Company Limited (NNPCL).

Contrary to IPMAN's stance, refinery officials confirmed that the facility has already initiated petrol sales to select marketers.

Regarding pricing, controversy surrounds the refinery's petrol price. On September 15, NNPCL claimed to have purchased petrol from Dangote Refinery at N898 per litre. However, the refinery dismissed this assertion as misleading.

As of October 22, the official price of Dangote Refinery's petrol remains undetermined, awaiting announcement by the Naira-for-Crude Committee.

Additional Highlights:

• IPMAN conditions off-take on refinery's contract termination with NNPCL
• Dangote Refinery already selling petrol to some marketers
• Dispute over petrol pricing
• Naira-for-Crude Committee to determine official price.