FG Approves Direct Petrol Supply from Dangote Refinery to Marketers

Dangote Refinery to Supply Petrol Directly

“This transition is expected to enhance efficiency in product availability and stabilize market conditions...”

Latest Fuel Price Increase: NNPCL Raises Petrol Prices to ₦998 in Lagos, ₦1,030 in Abuja, Amidst IPMAN Debt Dispute

The Federal Government has given the green light to fuel marketers to directly lift premium motor spirit (PMS), also known as petrol, from the Dangote Refinery, bypassing the Nigerian National Petroleum Company Limited (NNPCL). This decision was made following a directive from the Federal Executive Council (FEC) and the implementation of a new naira-based sales mechanism, as announced by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy.

This move ends the previous arrangement where NNPCL was the sole off-taker of Dangote Refinery products. The Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Petroleum Products Retail Outlets Owners Association of Nigeria had been seeking to purchase petrol directly from the refinery instead of going through NNPCL.

Benefits of the New Arrangement:

Increased Competition: Direct lifting of petrol from the Dangote Refinery will create healthy competition in the downstream sector.

Improved Product Availability: Marketers will have direct access to products, ensuring availability to the public 

Deregulation of the Petroleum Market: This move is a significant step towards deregulating the petroleum market.

The government seeks to boost competition and transparency in the downstream sector by permitting marketers to source petrol directly from Dangote Refinery.

“New Direct Purchase Model: The most significant change under the new regime is that petroleum product marketers can now purchase PMS directly from local refineries,” the minister who chairs the Implementation Committee on the Sales of Crude Oil and Refined Products in Naira said.

“This marks a departure from the previous arrangement where the Nigerian National Petroleum Corporation (NNPCL) served as the sole purchaser and distributor of PMS (petrol) from the refineries.”

The Federal Government's decision enables fuel marketers to engage directly with refineries, negotiating commercial terms that foster a competitive market environment and optimized petroleum supply chain. Finance Minister Wale Edun emphasized the benefits of this new framework.

During the October 10 committee meeting, Minister Edun hailed the imminent local production of Premium Motor Spirit (PMS) as a transformative industry milestone. He noted that domestic production will significantly enhance efficiency, self-sufficiency, and overall industry performance.

“This transition is expected to enhance efficiency in product availability and stabilize market conditions for the benefit of all Nigerians,” Edun said.

 The Minister ensured the committee that they would offer transparent and comprehensive explanations for the shifts in the market.

“We are committed to providing clarity on this development and will continue to engage with stakeholders to ensure a seamless transition process,” he assured.

The approval for petroleum marketers to source products directly from the Dangote Refinery is a major breakthrough, fulfilling a long-standing request by marketers nationwide. This development is expected to bolster the sector.

In a related development, the Independent Petroleum Marketers Association of Nigeria (IPMAN) revealed on October 10 that the Nigerian National Petroleum Company Limited (NNPCL) owes the association approximately N15 billion. Additionally, IPMAN stated that NNPCL has failed to meet its product supply commitments to members, further highlighting the need for direct sourcing.

“Roughly now, they are owing us almost getting to N15 billion,” IPMAN's National President Abubakar Garima said.

“Our money has been with the NNPCL for almost three months now. Either they sell for us at the same rate they are getting the product from Dangote Refinery or refund us so we can buy directly from Dangote Refinery,” Garima said.

The recent hike in petrol pump prices at NNPCL's retail outlets in Lagos and Abuja has sparked controversy. Specifically, prices have risen to ₦998 per litre in Lagos, a significant increase from ₦855, and ₦1,030 in Abuja, up from ₦897.

Furthermore, some filling stations in Lagos have taken the price to an all-time high of ₦1,050 per litre, exacerbating concerns among consumers.