NNPC Exits as Middleman in Dangote Refinery Petrol Purchases

The Nigerian National Petroleum Company Limited (NNPC) has announced its decision to end its role as the middleman in the purchase of petrol from Dangote Refinery. This development allows other marketers to negotiate prices directly with the refinery, signaling a shift towards a more competitive market for petrol distribution in Nigeria.

The change means that NNPC will no longer act as the sole off-taker of petrol from Dangote Refinery. This aligns with the current practices governing fully deregulated products, where refineries can engage in direct sales to marketers based on a willing buyer, willing seller model.

Devakumar Edwin, Vice President of Gas and Oil at Dangote Industries Limited, confirmed earlier in September that the Dangote Refinery, which has a capacity of processing 650,000 barrels per day, had begun production of petrol. He clarified that while NNPC Limited had initially agreed to purchase products exclusively, the refinery was permitted to sell to other marketers.

In response to allegations that it was undermining Dangote Refinery’s operations, NNPC asserted that both Dangote and other domestic refineries were free to sell directly to any interested marketers under deregulated conditions.

However, the dynamics shifted on September 15, when NNPC began loading petrol from the Dangote Refinery. Reports later surfaced indicating that while some major petroleum marketers had been authorized to lift products under an agreement with NNPC, independent marketers remained largely excluded.

On September 26, the House of Representatives urged the federal government to mandate both NNPC Ltd and Dangote Refinery to allow independent marketers access to petrol directly from the refinery. This call, prompted by a motion from Oboku Oforji (PDP, Bayelsa), highlighted concerns that the exclusion of independent marketers could hinder competition within the sector. Oforji argued that such a monopoly would stifle market efficiency and may force some marketers to resort to importing products to remain viable.

“NNPCL and the major marketers being the exclusive off-takers spells monopoly, which is tantamount to greed,” Oforji stated, criticizing NNPC for its historical mismanagement of crude and refinery operations.

Industry sources have indicated that NNPC’s withdrawal as the sole off-taker will facilitate a more competitive landscape, allowing marketers to purchase petrol at prevailing market prices from Dangote Refinery, thereby potentially stabilizing supply chains.

Although NNPC spokesperson Femi Soneye could not be reached for comment, a senior official confirmed the company’s new direction, stating, “Yes, it is true. We can no longer continue to bear that burden.”

Previously, NNPC claimed it was acquiring petrol from Dangote Refinery at N898.78 per litre and selling it to marketers at N765.99, absorbing a subsidy of approximately N133 per litre. From September 15 to 30, NNPC lifted about 103 million litres from Dangote, with 2,207 out of 3,621 trucks loaded during that period.