IPMAN, PETROAN Seek Direct Dangote Refinery Supply to Slash Fuel Prices

Fuel Price Reduction Expected with Dangote Refinery Direct Sales

“Our petrol price will be cheaper than that of NNPC Retail price if Dangote refinery sells petrol to us...”

IPMAN Seeks Solution to Nigeria's Energy Woes. Discover how direct fuel purchase from Dangote Refinery can stabilize prices.

The Federal Government has announced that petroleum marketers can now buy directly from the Dangote refinery, ending NNPCL's monopoly on purchasing the refinery's output. This game-changing policy was confirmed by Wale Edun, Minister of Finance and chairman of the implementation committee for the Naira-for-crude program, on October 11.

What does this mean?

The Nigerian National Petroleum Company Limited (NNPC) will no longer be the sole buyer of Dangote refinery's petrol, allowing independent marketers to purchase fuel directly and bypass NNPC's intermediary role. Previously, NNPC would buy petrol from Dangote at a higher price and resell it to marketers at a lower price, absorbing a significant subsidy.

Benefits of the new policy

This shift is expected to reduce costs and increase efficiency in the fuel distribution chain. Petroleum marketers, like IPMAN, are optimistic that they can offer petrol at lower prices to consumers once they start buying directly from the Dangote refinery.

The bigger picture

This development marks a significant transformation in Nigeria's fuel distribution landscape, opening up the market to more players and potentially leading to better pricing and service delivery.

Nigerian petroleum marketers are upbeat about selling petrol at lower prices than the Nigerian National Petroleum Company Limited (NNPCL) once the Dangote refinery commences direct sales.

In an interview on Monday, October 14, Chinedu Ukadike, Independent Petroleum Marketers Association of Nigeria (IPMAN) spokesperson, revealed plans to source petrol directly from the refinery.

This move signals a significant transformation in Nigeria's fuel distribution landscape.

Chinedu Ukadike, IPMAN spokesperson, confirmed the association's readiness to purchase petrol directly from Dangote refinery once sales start. IPMAN manages 70% of Nigeria's filling stations.

Direct access to Dangote's petrol will cut costs previously added by NNPCL, allowing marketers to reduce prices. Ukadike promised prices at IPMAN stations will drop below NNPCL's current N1,030 per litre in Abuja once direct sales begin.

“We are still waiting on Dangote refinery on the direct sale of its petrol to our members and the price template.

“Our petrol price will be cheaper than that of NNPC Retail price if Dangote refinery sells petrol to us.

“Because we are buying from the same source, the fee NNPC puts on top before selling to marketers will be cut off.

“We are not government workers, we don't earn salaries, our profits emerge from turnovers.

“We are hoping we have a meeting with Dangote refinery Tomorrow (Tuesday) or soon,” Ukadike said.

Dangote refinery has yet to respond to PETROAN's request for direct PMS procurement, said President Billy Gillis-Harry.

Gillis-Harry emphasized that marketers require a transparent pricing framework to make direct purchases viable.

“They have requested a letter from us, but we've not received an update after sending the letter.

“Till today, they have yet to tell anybody how much they are selling their product. They expect us to take our trucks to the refinery plant without knowing the price of petrol?

“We're willing to support Dangote refinery,” he said.

The optimism among petrol marketers seems short-lived, as fuel prices surged after the Dangote refinery's initial product distribution. Oil and gas expert Olabode Sowunmi clarified that the refinery wasn't designed to provide cheap Premium Motor Spirit (PMS) to Nigerians.

Fuel prices have skyrocketed under President Bola Ahmed Tinubu's administration. Petrol hit a record N1,030 per liter on October 9, 2024, up from N238 in June 2023. This sharp rise followed Tinubu's fuel subsidy removal announcement.

Nigeria's energy prices have taken a drastic turn for the worse. As of September 16, 2024, the Nigerian National Petroleum Company Limited (NNPCL) hiked petrol prices to between N1,030 and N1,200 per liter. This surge is part of a broader trend of skyrocketing energy costs, with Automotive Gas Oil (diesel) reaching N1,406 per liter and Liquefied Petroleum Gas (LPG) prices soaring to N15,552.56 for a 12-kilogram cylinder in August 2024.

To put this into perspective, these prices are significantly higher than last year's rates of N854.32 and N9,194.41, respectively. The escalating cost of energy, combined with rising food prices and fluctuations in the Naira's value on the foreign exchange market, has intensified economic challenges under President Tinubu's leadership.

Key Price Increases:

• Petrol: N1,030 - N1,200 per liter (September 2024)
• Diesel (Automotive Gas Oil): N1,406 per liter
• LPG (12-kg cylinder): N15,552.56 (August 2024)

In response to these economic hardships, President Tinubu has approved a $2.25 billion injection into the economy, sourced from the World Bank, to enhance revenue and support economic reforms. However, critics argue that his policies, such as the removal of petrol subsidies and floating the Naira, have driven the nation into unprecedented economic despair.

Nigeria's energy crisis continues to worsen despite a significant tariff hike. In April 2024, the Nigerian Electricity Regulatory Commission (NERC) approved a 240% increase for customers in Band A, who receive 20 hours of power daily. These customers now pay N209.5 per kilowatt-hour (KW/h), a substantial jump from the previous rate of N66.

The country's electricity supply remains alarmingly low, with only 5,000 megawatts available for its massive population of over 200 million people. To put this into perspective, South Africa, Africa's second-largest economy, generates 40,000 megawatts of power for a population of 62 million. Nigeria's energy woes are compounded by frequent national grid collapses, with the most recent occurrence happening on October 14, 2024 - the fifth collapse this year alone.

Challenges Facing Nigeria's Power Sector

Inadequate Transmission Infrastructure: The transmission network, still controlled by the government, remains the weakest link in the power sector supply chain.

Limited Power Generation: Nigeria's theoretical capacity of over 10,000 megawatts is hindered by its reliance on fossil fuels and lack of investment in alternative energy sources.

Environmental Concerns: The country's dependence on coal, oil, and natural gas contributes to greenhouse gas emissions, exacerbating climate change.

The Transmission Company of Nigeria (TCN) is working to restore the grid, but a long-term solution is needed to address the country's energy crisis.

President Bola Ahmed Tinubu remains optimistic about Nigeria's future despite the current economic difficulties. At the Nigerian Economic Summit Group meeting on October 14, Vice President Kashim Shettima, representing Tinubu, expressed confidence that Nigeria will overcome its economic challenges. This optimism is in line with Tinubu's previous statements, where he emphasized that Nigeria has gone through tough times, but his focus is on moving forward.

Tinubu's administration has been working to address the economic challenges, including the removal of subsidies and liberalizing the foreign exchange market. Although these moves have been met with public outcry and criticism, the president remains committed to enacting impactful reforms and practical policies to tackle the root causes of Nigeria's economic struggles.

The formation of the Tripartite Economic Advisory Committee, comprising eminent figures like Aliko Dangote and Tony Elumelu, is also a step towards revitalizing the economy. This committee aims to formulate a comprehensive policy framework to address issues such as job creation, food security, and economic reflection.

While the journey ahead is complex and challenging, Tinubu's determination and commitment to building a brighter future for Nigerians are evident. As Tony Elumelu noted, the meeting convened by the president has propelled Nigeria's economy, alleviating poverty, creating employment, and providing food security for Nigerians.

“The challenges before us can be overcome with the right policies.

“I implore every Nigerian that the challenge before us is not insurmountable, if we collaborate, we'll overcome,” the Vice President said.