NNPC ends exclusive purchase agreement with Dangote Refinery

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

This shift aligns with the fully deregulated market practice where refineries can sell directly to marketers on a “willing buyer, willing seller” basis.

Earlier in September, Devakumar Edwin, Vice President at Dangote Industries Limited, stated that NNPC would be the sole buyer of its petrol.

However, the NNPC has now clarified that it is not the sole off-taker and that Dangote Refinery is free to sell to any marketer.

On September 15, NNPC began loading petrol from the 650,000 barrels-per-day Dangote Refinery, with some major marketers approved for product lifting under an NNPC agreement.

Independent marketers were excluded, sparking calls for greater access. On September 26, the House of Representatives urged the federal government to mandate NNPC and Dangote Refinery to permit independent marketers to lift petrol directly, promoting competition and reducing costs in the sector.

“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,” the lawmaker said at the time.

Those familiar with the matter told PREMIUM TIMES that NNPC is now set to withdraw as the sole off-taker to allow other marketers to directly purchase petrol from Dangote Refinery at the prevailing market price, promoting competition and potentially stabilising supply chains.

Femi Soneye, the spokesperson for the NNPC is not immediately available to comment for this story but a top official of the company confirmed the development to PREMIUM TIMES Monday morning.

“Yes, it is true,” the official said. “We can no longer continue to bear that burden.”

The NNPC had claimed in September that it was buying petrol from Dangote Refiner at N898.78 per litre and selling to marketers at N765.99 per litre, shouldering a subsidy of almost N133 per litre.

The NNPC lifted about 103 million litres of petrol from Dangote Refinery between September 15 and 30. The refinery was able to load 2,207 of 3,621 trucks sent to it within the period under review.

The vehicles carried just 102,973,025 litres of the planned 400,000,000 litres of petrol earmarked to be lifted from the refinery at 25 million litres per day. That translated to just 26 per cent performance, records seen by PREMIUM TIMES show.

Implications

NNPC’s withdrawal as the sole off-taker of Dangote petrol marks a significant shift towards complete liberalisation of the market, allowing marketers to source products directly from Dangote Refinery or other suppliers.

With NNPC no longer covering the differential between Dangote’s selling price and the price to marketers, subsidies will cease to exist. Marketers will now buy directly from Dangote and sell at cost price, adding their own differential, which may lead to a hike in the product’s price.

Also, marketers can now source products from anywhere, not just Dangote, promoting competition and potentially stabilising supply chains.