The commencement of the sale of petroleum products to the Nigerian market represents a watershed in the country’s energy market as it has broken over 50 years of products insufficiency and insecurity, which had at different times unleashed untold hardship on Nigerians.
Group Chief Branding and Communications Officer of Dangote Group, Anthony Chiejina, made the assertion in a statement, yesterday, while confirming that the refinery “sold the products to the Nigerian National Petroleum Company Limited (NNPCL) in dollars with a lot of savings against what they are currently importing.”
Chiejina said the public should await a formal announcement on the proper pricing by the technical sub-committee on the naira-based crude sales to local refineries.
The “naira-for-crude, naira-for-product”, a financial arrangement brokered by President Bola Ahmed Tinubu, is expected to begin on October 1, 2024 to free up the economy and all the parties from the risks of foreign currency-based transactions.
The implementation of the arrangement is under the guidance of the Federal Executive Council (FEC) and immediate direction and monitoring of the Minister of Finance and Coordinating Minister of the Economy, Wale Edun and Chairman of the Federal Inland Revenue Service (FIRS), Zach Adedeji.
The domestic payment arrangement whereby crude oil is sold to local refineries and petroleum products are purchased in naira, is designed to alleviate pressure on the naira and reduce transaction costs.
The arrangement is also expected to improve the availability of petroleum products in the country while offering competitive pricing to oil marketers.
Describing the takeoff of petrol supply from Dangote Refinery as a milestone achievement, which broke over five decades of energy insufficiency and insecurity, he said: “With this action, there will be petrol in every local government area of the country regardless of their remote nature. We assure Nigerians of the availability of quality petroleum products and putting an end to the endemic fuel scarcity in the country.”
However, the supply and retailing of Dangote petrol is expected to be dictated by market forces as enshrined in the Petroleum Industry Act (PIA) and there are indications that the government would continue to modulate the pricing to cushion the effects of global crude volatility.
A source said the absence of absolute market forces explained why NNPCL, as a supplier of last resort to the nation, is taking on the supply of the Dangote petrol.
Vice President, Oil and Gas, Dangote Industries Limited (DIL), Devakumar Edwin, yesterday, said 44 per cent of the refinery’s PMS production could meet the country’s domestic demand, maintaining that the refinery has the capacity not only to meet Nigeria’s demand, but to also export and generate foreign exchange (forex).
“If you look at the refinery as a whole, PMS alone, every day, if we’re processing 650,000 barrels of crude, we can generate more than 54 million litres of PMS. And, of course, the refinery has the capacity to produce various other products too,” he added.
Meanwhile, NNPCL and Dangote Industries Limited have disagreed over pricing of petroleum products following the rollout of petrol from Dangote Refinery in Lagos as a document on the transaction indicated that NNPCL issued a Letter of Credit (LC) for over $120million to cover an initial supply of 25 million litres.
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Dangote Refinery released 16.3 million litres of Premium Motor Spirit (PMS) to NNPCL yesterday, a shortfall of 8.7 million litres from the 25 million litres demanded and paid for by the oil giant.
The refinery released a total of 12,200 metric tons of PMS from Tank No. 3201D at its complex based in Lekki Free Trade Zone, Ibeju-Lekki, Lagos for the first time.
Both NNPCL and Dangote agreed that the breakthrough transaction was conducted in dollars, but the parties were divergent on the related actual naira cost just as a transaction insider at the NNPCL said yesterday’ supply from Dangote Refinery was pegged at N898 per litre.
But in a statement, Dangote said the insinuated plant cost per litre of N898 was “misleading and mischievous.”
Reacting to Dangote’s statement, NNPCL Chief Communication Officer, Olufemi Soneye, confirmed that the price per litre from the refinery is N898.
He said: “If it is not N898, then what is the price? Let them inform Nigerians of the actual cost. We have issued Letters of Credit for the product, and there’s an invoice. Let them disclose the price.”
With the supply from Dangote Refinery, sources say NNPCL is expected to release the template for new retail pricing today.
NNPCL currently runs a retail price of N855 per litre and N865 per litre in Lagos and Ogun states, its closest supply routes.
The retail pricing template provides for a slight premium on the average base price, depending on the distance of the supply route.
