The Nigerian National Petroleum Company Limited (NNPC) is ending its exclusive purchase agreement with Dangote Refinery, opening up the market for other marketers to buy petrol directly from the refinery.
This means NNPC will no longer be the sole off-taker, and marketers can now negotiate prices directly with Dangote Refinery.
This development aligns with the current practices for fully deregulated products, where refineries can sell directly to marketers on a willing buyer, willing seller basis, according to a report by PREMIUM TIMES.
Earlier in September, Devakumar Edwin, vice president at Dangote Industries Limited, said the 650,000 barrels per day Dangote Refinery has begun the processing of petrol. Mr Edwin explained that NNPC Limited would buy its product exclusively.
But the NNPC, in reaction to a statement that the Dangote Refinery Limited is being undermined by actions of the company at the time, said it was not the sole offtaker of all products from the Dangote Refinery. It said the refinery was free to sell its petrol to any marketer.
The NNPC explained that the Dangote Refinery and any other domestic refinery were free to sell directly to any marketer on a willing buyer, willing seller basis, which is the current practice for all fully deregulated products such as diesel, aviation fuel and kerosene. But on 15 September, the NNPC began loading petrol from the Dangote Refinery. Although some major petroleum marketers were later reportedly approved to lift the product from the refinery under an agreement with NNPC Ltd, independent marketers remained excluded
On 26 September, the House of Representatives called on the federal government to mandate the NNPC Ltd and Dangote Refinery to allow independent marketers to lift petrol directly from the refinery.
The lower chamber also urged the management of Dangote Refinery to build, acquire, or partner to establish tank farms or depots across the geo-political zones of the country, to ease access to petroleum products for the public. This call followed a motion of urgent public importance moved on Thursday by Oboku Oforji (PDP, Bayelsa). Moving the motion, Mr Oforji explained that the exclusion of independent marketers threatened competition in the sector.
He noted that competition is essential for reducing costs, adding that some marketers may resort to importing products to survive in the market. “NNPCL and the major marketers being the exclusive off-takers spells monopoly, which is tantamount to greed. This is the same NNPC Ltd that has failed to manage our crude and refineries for decades,” the lawmaker said at the time.
Those familiar with the matter told PREMIUM TIMES that NPC is now set to withdraw as the sole off-taker to allow other marketers to directly purchase petrol from Dangote Refinery at the prevailing market price, promoting competition and potentially stabilising supply chains.
