NNPC ends exclusive right with Dangote refinery

The Nigerian National Petroleum Company Limited (NNPC) has terminated its exclusive purchase deal with Dangote Refinery, allowing other marketers to buy fuel directly.

This comes shortly after the government declared that it has started selling crude to Dangote in naira.

The regulatory agency recently announced that it would end its exclusive purchase rights with the Dangote refinery, which it has held since its inception.

In an interview with the aforementioned magazine, an NNPC official confirmed the information, saying, “Yes, it is true.” We cannot endure that burden any longer.”

The House of Representatives demanded that the federal government instruct NNPC Ltd to allow independent marketers to purchase gasoline directly from the refinery. This essentially means that Dangote is now free to negotiate with marketers directly on how to establish market rates.

“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,” member of the House, Oboku Oforji (PDP, Bayelsa), stated.

Since the Dangote refinery started operating, there has been conflict over who is to blame for the locally manufactured gasoline produced by Dangote being more expensive than gasoline imported by the NNPC or the refinery.

The regulatory agency had previously disclosed that it would buy fuel from the Dangote refinery for N898.78 per litre and resale it to retailers for N765.99 per litre, meaning that each litre would need to pay around N133 in subsidies.

It goes without saying that the subsidies that the NNPC had put in place would be removed now that their exclusive agreement with Dangote to provide gasoline from his refinery has terminated.

In mid-September, the NNPC announced that it would be the exclusive distributor of refined fuel while providing the Dangote Refinery with about 385,000 barrels of crude oil per day. This came about despite Dangote’s insistence that he was prepared to load trucks for the product’s distribution.

The NNPC transported around 103 million litres of fuel from the Dangote Refinery between then and the end of September. The refinery was able to load 2,207 of the 3,621 trucks.

Only around 5% of neighbourhood fuel dealers were purchasing goods from the Dangote Refinery at the time. As a result, the refinery reduced its sales to just 29 tankers of diesel each day.

There was an impasse between the two parties earlier in September on who would set the price at which Dangote fuel would be sold.

At first, Dangote disclosed that President Bola Ahmed Tinubu’s Federal Executive Council would draft and adopt the mechanism for pricing gasoline.

Despite this, it was stated that Nigeria was looking into the prospect of letting Dangote’s refinery set the gasoline price.

This back and forth continued, with the public never receiving any conclusive information.

However, one of the main obstacles to the manufacturing of Dangote gasoline was removed when the Nigerian government started selling its crude oil to Dangote Refinery and other refineries in naira on October 1, 2024.

The Dangote refinery will therefore have to supply the local market with diesel and PMS (petrol), both valued at the same amount and denominated in naira.

In a signed statement on Saturday, October 5, 2024, the nation’s minister of finance, Wale Edun, recognized the policy’s adoption and said it was a significant step the government had taken to stabilize the economy and support Nigeria’s growth and development.