The Nigerian National Petroleum Company Limited (NNPC) has officially terminated its exclusive purchase agreement with Dangote Refinery, allowing independent marketers to buy petrol directly from the refinery, PREMIUM TIMES reports.
This marks a significant shift in the market dynamics for petrol distribution.
Before now, the NNPC was the sole off-taker of petrol from the 650,000 barrels per day Dangote Refinery, but the new arrangement now enables other marketers to negotiate directly with the refinery on a willing buyer, willing seller basis.
This approach mirrors the market practices for other fully deregulated products like diesel, aviation fuel, and kerosene.
Devakumar Edwin, Vice President at Dangote Industries Limited, confirmed in September that Dangote Refinery had commenced petrol processing.
At the time, NNPC was the exclusive buyer of the product, but this arrangement has now ended, following demands for a more competitive market.
In a statement, NNPC explained that both Dangote Refinery and any other domestic refineries are free to sell their products directly to marketers.
However, independent marketers were initially excluded from lifting the product, sparking concerns about competition in the sector.
On September 26, the House of Representatives intervened, urging the federal government to mandate NNPC and Dangote Refinery to allow independent marketers access to petrol supplies.
Oboku Oforji, a PDP lawmaker from Bayelsa, emphasized the need for competition, 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.”
Insiders now confirm that the NNPC has decided to step aside as the sole off-taker, promoting a more competitive market.
“Yes, it is true,” said an official familiar with the matter. “We can no longer continue to bear that burden.”
The NNPC had previously subsidized petrol by buying from Dangote Refinery at N898.78 per litre and selling to marketers at N765.99 per litre.
Between September 15 and 30, NNPC lifted 103 million litres of petrol, but only 26% of the planned 400 million litres was delivered due to logistical challenges.
This policy shift will likely end subsidies, as marketers will now purchase petrol directly from the refinery at market rates and set their own prices, potentially leading to higher costs for consumers.
However, the introduction of competition could stabilize supply chains and create a more balanced market.
With NNPC’s exit, independent marketers can now source petrol from various suppliers, including Dangote Refinery, reshaping the landscape of petrol distribution in Nigeria.
