By Ohuakanwa Chibuzo
Oil marketers in Nigeria are exploring the option of importing Premium Motor Spirit (PMS), commonly known as petrol, following a recent statement from the Nigerian National Petroleum Company Limited (NNPC). The state-owned oil company declared it would only purchase petrol from the Dangote Petroleum Refinery if the commodity’s market price exceeded Nigeria’s current pump price.
In a surprising shift, NNPC also confirmed that domestic refineries, including Dangote’s, could sell directly to marketers on a “willing buyer, willing seller” basis. This marks a departure from previous assumptions, particularly a statement by Alhaji Aliko Dangote, President of the Dangote Group, who had said that the NNPC would be the sole off-taker of petrol produced at his $20 billion refinery.
In response to the stalled discussions between Dangote and NNPC, oil marketers have indicated their readiness to source petrol from cheaper suppliers, potentially through importation. Mustapha Zarma, National Operations Controller of the Independent Petroleum Marketers Association of Nigeria (IPMAN), said, “We may contact the refinery to discuss prices. If it is competitive, we’ll purchase from Dangote; otherwise, we’ll consider imports.”
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NNPC’s stance implies no government intervention in the pricing of Dangote’s petrol, sparking speculation that oil marketers will now seek out cheaper alternatives from either local or international producers. Zarma noted that the industry’s flexibility in sourcing petrol could lead to price competition, similar to the dynamics in Nigeria’s diesel market.
Industry experts suggest the NNPC’s reluctance to commit to Dangote’s petrol highlights the government’s hesitance to fully end fuel importation. This is despite recent increases in petrol prices and NNPC’s admission of a N7.8 trillion subsidy burden on PMS imports this year alone.
NNPC’s Chief Financial Officer, Umar Ajiya, confirmed that the company was still directed to sell petrol at half its landing cost, maintaining an unsustainable subsidy that covered the price gap. Although the official pump price of petrol is around N600 per litre, the landing cost is closer to N1,200 per litre.
IPMAN’s National Publicity Secretary, Ukadike Chinedu, echoed the concerns, adding that if Dangote’s prices were uncompetitive, marketers would turn to imports. The association has already begun discussions with investors about potential import deals.
The ongoing rift between NNPC and Dangote has cast doubt on the latter’s ambitious plans to end Nigeria’s reliance on imported fuel. Despite launching the largest refinery in Africa, Dangote’s efforts may be delayed, as NNPC remains hesitant to embrace the refinery’s petrol output fully.
President Bola Tinubu recently directed that domestic refineries, including Dangote’s, be allowed to purchase crude oil in naira, a move intended to reduce Nigeria’s foreign exchange expenditure. However, with NNPC maintaining its role as the country’s main petrol importer, it remains unclear when the Dangote refinery will achieve its goal of curbing Nigeria’s fuel imports.
The situation remains fluid, with oil marketers waiting for NNPC to finalize agreements and make petrol available to independent filling stations across the country.