In a recent development, oil marketers in Nigeria have declared that no dealer will purchase Premium Motor Spirit (PMS), commonly known as petrol, from the Dangote Petroleum Refinery and sell it at the current pump prices, except the Nigerian National Petroleum Company Limited (NNPC).
The President of Dangote Industries Limited, Alhaji Aliko Dangote, announced that the $20 billion refinery would begin producing petrol in July 2024 and commence sales in August 2024. This follows the resolution of crude oil supply issues with assistance from NNPC and the Federal Government. “Gasoline (petrol) production is to commence in July with sales from August. Annual revenue is projected to exceed $26 billion,” Dangote stated during a presentation at the plant last month.
However, oil marketers told The PUNCH on Sunday that no dealer in Nigeria could afford to buy petrol from the Dangote refinery, as it would be priced at the international market rate, significantly higher than the domestic pump prices. Deputy National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Zarma Mustapha, confirmed there had been no official communication about the pricing of petrol from the Dangote refinery.
Mustapha explained that PMS from the refinery would be sold at international market rates, which no marketer would currently be willing to pay. “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,” he stated.
He emphasized that the refinery, as an independent commercial entity, must recoup its refining costs and add a margin before selling the product. “The current price of the product within the country is below the international price of a litre of PMS. 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 per litre,” Mustapha added.
Mustapha suggested that for Nigeria to have Dangote petrol across its filling stations, NNPC would need 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 per litre. It is not possible,” Mustapha stated.
On July 18, 2024, The PUNCH reported that the landing cost of petrol was N1,117 per litre as of July 16, 2024, according to data released by the Major Energies Marketers Association of Nigeria (MEMAN). MEMAN disclosed this during a webinar with journalists, also revealing that the landing cost of diesel was N1,157 per litre, while aviation fuel was N1,127 per litre.
The N1,117 landing cost of petrol is significantly higher than the current pump price in Nigeria, which ranges from N660 to N800 per litre, depending on the area of purchase. Executive Secretary of MEMAN, Clement Isong, indicated that the realistic cost of petrol is reflected in the landing cost they published. “You have seen the price we published which is the realistic cost, and you know the cost at the pumps today, and Dangote refinery is a business entity that will not want to make losses. So that is all I will say,” he stated.
NNPC, currently the sole importer of petrol into Nigeria, has yet to respond to inquiries on the matter as of the time this report was filed. Other marketers stopped importing the product due to difficulties accessing the United States dollar required for PMS imports.
