No oil marketer is going to buy Premium Motor Spirit, popularly called petrol, from the Dangote Petroleum Refinery and sell at the prevalent pump prices at filling stations in Nigeria except the Nigerian National Petroleum Company Limited, operators in the downstream oil sector have declared.
On July 15, 2024, The PUNCH reported that the President of Dangote Industries Limited, Alhaji Aliko Dangote, announced that the $20bn refinery was set to roll out its petrol in August 2024, having resolved its crude oil supply issues through the help of NNPC and the Federal Government.
“Gasoline (petrol) production is to commence in July with sales from August. Annual revenue is projected to exceed $26bn,” Dangote had stated while delivering a presentation at the plant last month.
But oil marketers told our correspondent on Sunday that no dealer in Nigeria would be able to buy the petrol from the Dangote refinery, because the product would be priced at the international market rate, far higher than the domestic cost at the pumps.
When contacted and asked whether oil marketers had been briefed about the price of petrol from the Dangote refinery, the Deputy National President of the Independent Petroleum Marketers Association of Nigeria, Zarma Mustapha, gave a negative reply.
He, however, stressed that PMS from the plant would be sold at the international market rate, adding that no marketer would want to pay such price currently.
“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.
“This is because the refinery is an independent commercial entity and they must recoup their cost of refining and add some margin before they sell out 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/litre,” Mustapha stated.
The IPMAN official, however, noted that for Nigeria to have Dangote petrol across its filling stations, the NNPC would have 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/litre. It is not possible” Mustapha stated.
On July 18, 2024, The PUNCH reported that the landing cost of petrol was N1,117/litre as of July 16, 2024, according to data released by the Major Energies Marketers Association of Nigeria. MEMAN disclosed this during a webinar with journalists.
The association had also revealed that the landing cost of diesel was N1,157/litre, while that of aviation fuel was N1,127/litre, at the time.
The N1,117 landing cost of petrol is far above the pump price of the product in Nigeria. Currently, the pump price of petrol is between N660/litre and N800/litre, depending on the area of purchase.
When contacted and asked whether major marketers would be able to buy petrol from the Dangote refinery, the Executive Secretary, MEMAN, Clement Isong, said his group had earlier published the landing cost of PMS, adding that this was the realistic cost of the product.
“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 is currently the sole importer of petrol into Nigeria. Other marketers stopped importing the product due to their inability to access the United States dollar required for PMS imports. NNPC had yet to respond to enquiries on the matter when contacted, up till when this report was filed.