The Nigerian National Petroleum Company Limited (NNPC) is ending its exclusive purchase agreement with Dangote Refinery, allowing other marketers to buy petrol directly from the refinery, reports PREMIUM TIMES.
This development marks a significant shift towards complete liberalization of the market. NNPC will no longer be the sole off-taker, and marketers can negotiate prices directly with Dangote Refinery.
According to Devakumar Edwin, vice president at Dangote Industries Limited, the 650,000 barrels per day Dangote Refinery began processing petrol in September. Initially, NNPC Limited was to buy its product exclusively.
However, NNPC clarified that it was not the sole off-taker, and Dangote Refinery was free to sell petrol to any marketer. This aligns with current practices for fully deregulated products, where refineries sell directly to marketers on a willing buyer, willing seller basis.
In September, NNPC began loading petrol from Dangote Refinery, but initially only major marketers were approved to lift the product under an agreement with NNPC Ltd, excluding independent marketers.
On September 26, the House of Representatives called on the federal government to mandate NNPC Ltd and Dangote Refinery to allow independent marketers to lift petrol directly from the refinery.
Oboku Oforji (PDP, Bayelsa) moved the motion, stating that excluding independent marketers threatened competition and could lead to higher costs.
“NNPCL and major marketers being exclusive off-takers spells monopoly, which is tantamount to greed,” Oforji said.
Now, NNPC is set to withdraw as the sole off-taker, allowing other marketers to purchase petrol from Dangote Refinery at the prevailing market price.
“We can no longer continue to bear that burden,” an NNPC official confirmed.
NNPC previously claimed it bought petrol from Dangote Refiner at N898.78 per liter and sold to marketers at N765.99 per liter, shouldering a subsidy of almost N133 per liter.
