Major Oil Marketers to Begin Direct Purchase of Dangote Petrol

From Thursday through next week, major oil marketers will begin purchasing Premium Motor Spirit (PMS), also known as petrol, directly from Dangote Petroleum Refinery, following the withdrawal of the Nigerian National Petroleum Company Limited (NNPCL) as the sole off-taker from the $20bn facility.

Multiple sources from both NNPCL and the Major Oil Marketers Association of Nigeria (MEMAN) confirmed that NNPCL will no longer exclusively off-take petrol from Dangote, opening the market for other players in the downstream sector to buy products directly from the refinery.

Unconfirmed reports also indicated that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had released new, higher petrol prices for different locations nationwide. However, when contacted on Tuesday night, NMDPRA spokesperson George Ene-Ita did not confirm this development and did not respond to follow-up inquiries.

Marketers see NNPCL’s decision to step down as the sole off-taker as a sign that the Federal Government has effectively ended fuel subsidies. On September 25, The PUNCH reported that the government could have been spending up to N236bn monthly on subsidies for both imported petrol through NNPC and the Dangote refinery-sourced petrol exclusively off-taken by NNPC. The report suggested that NNPC was spending about N3.3bn daily on Dangote petrol subsidies, translating to around N99bn in 30 days.

However, by ceasing to be the sole off-taker, NNPC might now avoid these costs, as oil marketers will begin purchasing directly from Dangote Refinery. It marks a shift from previous government statements, which indicated that NNPC would remain the exclusive purchaser of petrol from Dangote.

Crude oil is set to be sold to Dangote in naira from October 1, with the refinery expected to supply petrol and diesel of equivalent value to the local market, also paid for in naira. While diesel can be sold directly to any interested buyer, previous government guidelines indicated that PMS would initially be sold only to NNPC, which would then distribute it to various marketers. Regulatory costs would also be paid in naira.

A senior official from a major oil marketing firm confirmed on Tuesday that dealers were yet to begin purchasing petrol directly from Dangote but acknowledged that the directive to start doing so had been issued earlier that day. The official added that Dangote has not yet announced any pricing, and for now, petrol sales continue at the prevailing rates, with depots and filling stations holding off on price changes until new stocks arrive.

An official with MEMAN also confirmed the shift, noting that for the past two weeks, they had been purchasing PMS from Dangote through NNPCL at roughly the same rates as before. Now, with the changes on the horizon, they are awaiting further details before making any new statements.

Another top executive from a major marketing company stated that direct purchases from Dangote might start next week. The executive explained that while the transition away from NNPCL as the sole off-taker had been confirmed, there would be a gradual shift in how marketers access products, with more clarity expected soon.

Similarly, an NNPCL management source confirmed that the company had stepped down from its position as Dangote’s sole off-taker due to the financial burden, stating that petrol prices would now be determined by market forces.