Independent marketers voice skepticism as the expectation for gasoline from the Dangote Refinery grows, pointing out that only the Nigerian National Petroleum Corporation (NNPC) can oversee the existing pricing arrangement.
The remarks are made in the midst of much conjecture on the possible effects of the Dangote Refinery on the petroleum market in Nigeria, particularly in light of the fact that Aliko Dangote, the president of Dangote Industries Limited, had previously declared that the refinery will begin producing gasoline in August 2024.
The Dangote Refinery, poised to be one of the largest in the world, is set to revolutionise the Nigerian oil and gas sector by increasing local refining capacity. Despite this optimism, fuel marketers remain cautious about the pricing structure and its implications for the market.
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Zarma Mustapha, the Deputy National President of the Independent Petroleum Marketers Association of Nigeria, said that Premium Motor Spirit (PMS) from the plant would be sold at the international market rate, adding that no marketer would want to pay such price currently.
“There has been no official communication from them yet on pricing for petrol. However, one thing I want you to understand is that even if the Dangote refinery starts to release products, particularly PMS, no marketer can be able to buy the product from him.
This is because the refinery is an independent commercial entity and they must recoup their cost of refining and add some margin before they sell out the product. The current price of the product within the country is below the international price of a litre of PMS.
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“So you cannot buy the product from the refinery at the international price and then sell it at the prevailing price at the retail outlets. If you do, you are going to lose a huge amount of money, which is a difference of between N400 and N500/litre,” Mustapha said.
The IPMAN official, however, noted that for Nigeria to have Dangote petrol across its filling stations, the NNPC would have to intervene by purchasing the product and reselling it to dealers at discounted rates.
“NNPC may have to offtake the product, just like they are importing from other countries for upward supply to Nigerian marketers, I think only the national oil company can offtake PMS from them and know how best they can continue to supply it to marketers to sell at the approved current price.
“If it is not done this way, no marketer will be able to buy the product and sell it at a loss of over N400 to N500/litre. It is not possible” Mustapha said.
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The NNPC is the only importer of petrol in Nigeria. Other independent and major marketers have ceased importing due to their inability to obtain the US dollars needed for PMS imports.
Mustapha revealed that the landing cost of petrol stood over N1000, exceeding the current pump prices in Nigeria, which range from N660 to N800 per litre, depending on the location.
Clement Isong, Executive Secretary of Major Energy Marketers Association of Nigeria, referred to a previously published landing cost of PMS, highlighting it as the true cost of the product.
“You have seen the published price, which reflects the realistic cost, and you are aware of the current pump prices. The Dangote refinery, being a business, will not operate at a loss. That’s all I can say,” Isong said.
