NNPC Quits As Exclusive Buyer Of Dangote Refinery Fuel

The Nigerian National Petroleum Company Limited (NNPC) has ended its exclusive purchase agreement with Dangote Refinery, allowing other marketers to buy petrol directly from the refinery.

According to Premium Times, this change means that NNPC will no longer be the only buyer, and marketers can negotiate prices directly with Dangote Refinery.

This move aligns with the practices for fully deregulated products, which allow refineries to sell directly to marketers on a willing buyer, willing seller basis.

In September, Devakumar Edwin, the vice president of Dangote Industries Limited, announced that the 650,000 barrels per day Dangote Refinery had started processing petrol and that NNPC would exclusively buy its products.

However, in response to concerns that Dangote Refinery was being undermined, NNPC clarified that it was not the sole buyer for all products and that the refinery was free to sell petrol to any marketer.

The NNPC stated that both Dangote Refinery and other domestic refineries could sell directly to any marketer under the same willing buyer, willing seller framework that applies to fully deregulated products like diesel, aviation fuel, and kerosene.

On September 15, NNPC began loading petrol from Dangote Refinery.

Although some major petroleum marketers were later permitted to lift products under an agreement with NNPC, independent marketers were still excluded.

On September 26, the House of Representatives urged the federal government to require NNPC and Dangote Refinery to allow independent marketers to lift petrol directly from the refinery.

They also called on Dangote Refinery to establish or partner with tank farms or depots across the country to make petroleum products more accessible to the public.

This request was made after a motion was raised by Oboku Oforji (PDP, Bayelsa), who noted that the exclusion of independent marketers was harming competition in the sector.

Oforji emphasized that competition is crucial for lowering costs and warned that some marketers might resort to importing products to stay in business.

He criticized the situation, stating, “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.”

Sources told PREMIUM TIMES that NNPC is now set to withdraw as the exclusive buyer, allowing other marketers to purchase petrol from Dangote Refinery at the market price, which is expected to foster competition and stabilize supply chains.

A top official from NNPC confirmed this development, stating, “Yes, it is true. We can no longer continue to bear that burden.”

NNPC’s decision to stop being the sole buyer of Dangote petrol signifies a major step toward complete market liberalization, allowing marketers to source fuel directly from Dangote Refinery or other suppliers.

With NNPC no longer covering the price difference between Dangote’s selling price and the price to marketers, subsidies will end. Marketers will now purchase directly from Dangote and set their prices, which could lead to an increase in petrol prices.

Additionally, marketers will have the flexibility to source products from various suppliers, not just Dangote, promoting competition and potentially stabilizing supply chains.

KanyiDaily recalls that the NNPC previously claimed it was buying petrol from Dangote Refinery at N898.78 per litre and selling it to marketers at N765.99 per litre, effectively subsidizing the price by almost N133 per litre.