The Nigerian National Petroleum Company Limited (NNPC) has officially terminated its exclusive purchase agreement with Dangote Refinery, enabling other marketers to engage in direct negotiations for petrol purchases. This strategic shift, confirmed by PREMIUM TIMES, opens the market for competitive pricing and is aligned with the deregulation practices of other petroleum products, PREMIUM TIMES exclusive story.
Transition to a Deregulated Market.
Previously, the NNPC was the sole off-taker of petrol from the Dangote Refinery, which has a processing capacity of 650,000 barrels per day. This arrangement limited the refinery’s ability to sell directly to other marketers. However, the recent change allows for a “willing buyer, willing seller” approach, similar to the market dynamics for diesel, aviation fuel, and kerosene.
In September, Devakumar Edwin, Vice President at Dangote Industries Limited, announced the commencement of petrol processing at the refinery. Although initially, the NNPC was the exclusive buyer, the company clarified that the refinery could sell to any marketer.
#### Legislative Push for Market Inclusion
On September 26, the House of Representatives urged the federal government to facilitate the inclusion of independent marketers in purchasing petrol directly from Dangote Refinery. The motion, led by Oboku Oforji of the PDP, Bayelsa, highlighted the importance of competition for cost reduction and market stability.
“NNPCL and major marketers being the exclusive off-takers spells monopoly, which is tantamount to greed,” Oforji stated. The call for action included a recommendation for Dangote Refinery to establish tank farms and depots nationwide, easing public access to petroleum products.
Market Impact and NNPC’s Financial Strain.
The shift is expected to foster competition and stabilize supply chains by allowing direct purchases at prevailing market prices. An NNPC official confirmed the development, noting the financial unsustainability of the previous arrangement.
The NNPC had been purchasing petrol at N898.78 per litre from Dangote Refinery and selling it at N765.99 per litre, effectively subsidizing nearly N133 per litre. Between September 15 and 30, the NNPC lifted about 103 million litres of petrol, achieving just a 26% performance of the planned 400 million litres.
Future Prospects.
The deregulation move is anticipated to encourage more marketers to enter the market, potentially lowering costs and enhancing supply reliability. The NNPC’s decision to end its exclusive agreement with Dangote Refinery marks a significant step towards a more competitive and sustainable petroleum market in Nigeria.