Rehabilitated Port Harcourt Refinery: Oil Marketers Demand Guarantees

Oil Marketers Set Conditions for Port Harcourt Refinery

The pricing disparity has significant implications for marketers, with some contemplating the importation...

Oil marketers are demanding competitive pricing from the Nigerian National Petroleum Company Limited for products from the Port Harcourt Refinery.

Oil marketers have set specific conditions for patronizing the newly rehabilitated Port Harcourt Refinery Company in Rivers State, which is managed by the Nigerian National Petroleum Company Limited (NNPCL). The marketers' primary demand is that the refinery must offer refined petroleum products at competitive prices.

To be competitive, the refinery must price its products lower than those of the Dangote Refinery. Currently, Dangote Refinery sells petrol at N970 per litre, while imported petrol is priced similarly. In contrast, the NNPCL is selling petrol at around N1,045 per litre, which the marketers consider uncompetitive.

The Port Harcourt Refinery Company successfully resumed operations on November 26, 2024, following years of dormancy. The refinery is currently operating at 70% of its installed capacity, producing a range of petroleum products including diesel, low-pour fuel oil, naphtha (blended into petrol), and kerosene.

With a daily petrol production capacity of 1.4 million litres, the refinery aims to dispatch approximately 200 petrol trucks to the market daily. Despite this promising output, concerns have been raised among marketers regarding the refinery's pricing strategy. Specifically, the marketers are hesitant to purchase petrol from the refinery due to its higher price compared to imported petrol. This may lead to continued fuel importation to meet local demand.

The Nigerian National Petroleum Company Limited (NNPCL) has not yet announced official prices for products from the Port Harcourt refinery. Currently, the company's stock is sourced from the Dangote Refinery, including associated fees and levies. As a result, NNPCL's pricing structure for the refinery's products remains unclear.

According to NNPCL's spokesperson, Olufemi Soneye, the company has not commenced bulk sales to marketers, nor has it activated its purchasing portal. Presently, refined products from the Port Harcourt refinery are only available at NNPCL's retail stations. This limited availability has sparked concerns among marketers regarding the refinery's pricing strategy and its potential impact on the market.

Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), emphasized that marketers would only purchase products from NNPCL if the prices are more competitive than those offered by Dangote or other sources. This stance underscores the need for NNPCL to establish a pricing structure that is attractive to marketers and aligns with market realities.

Chinedu Ukadike, National Publicity Secretary of IPMAN, expressed optimism that NNPCL might review its prices downward, aligning with global market trends. This potential adjustment could alleviate the current pricing disparity that has created uncertainty among marketers.

The pricing disparity has significant implications for marketers, with some contemplating the importation of petrol as a more viable option to ensure profitability. Recent data illustrates this trend, as oil marketers imported approximately 105.67 million litres of petrol (equivalent to 78,800 metric tonnes) between November 23 and November 28. This substantial import volume underscores the marketers' willingness to pivot toward importation if local pricing remains uncompetitive.

Conflicting reports have surfaced regarding the pricing of Nigerian National Petroleum Company Limited's (NNPCL) petroleum products. Dr. Joseph Obele, National Public Relations Officer of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), claimed that NNPCL's petrol is priced N75 higher than Dangote's. However, this assertion was disputed by PETROAN's President, Billy Gillis-Harry.

Billy Gillis-Harry clarified that marketers are currently purchasing products based on the old pricing structure, as they await updated rates from NNPCL. This ambiguity has left oil marketers cautious, emphasizing that competitive pricing will be the decisive factor in their decision to patronize NNPCL's Port Harcourt refinery.

The lack of pricing clarity and assurances of cost-effectiveness may lead the market to favor imported fuel, despite the rehabilitation of the Port Harcourt Refinery Company being a significant step towards Nigeria's energy self-sufficiency. Marketers are watching developments closely, awaiting a pricing structure that will make local refining a viable option.