Oil Marketers Eye Imports Amid Delays in NNPC-Dangote Deal

Oil marketers in Nigeria are exploring the possibility of importing petrol as discussions between the Nigerian National Petroleum Company Limited (NNPCL) and the Dangote Petroleum Refinery face delays. This move comes after NNPC’s recent statement that it will only purchase petrol from Dangote if the market prices are higher than domestic pump prices, signaling a shift towards a more competitive, market-driven approach.

NNPC also clarified that both Dangote and other domestic refineries are free to sell petrol directly to marketers on a “willing buyer, willing seller” basis. This differs from the previous position held by Dangote Group’s President, Aliko Dangote, who stated that NNPC would be the exclusive domestic buyer of petrol from the newly launched $20 billion refinery.

Reacting to the ongoing delay, independent oil marketers indicated they would source fuel from wherever prices are more favorable, including potentially importing the product. Mustapha Zarma, National Operations Controller of the Independent Petroleum Marketers Association of Nigeria (IPMAN), explained that marketers would only purchase from Dangote if the prices were competitive and offered a viable return on investment.

Zarma further confirmed that the removal of government subsidies on Dangote’s refinery output means that petrol pricing will be determined by market forces, allowing marketers to explore cheaper sources, both locally and internationally. This approach has already been applied to diesel imports, where prices have fluctuated in response to competition from both local producers, like Dangote, and foreign imports.

Industry experts suggest that the government’s reluctance to serve as Dangote’s sole off-taker reflects an unwillingness to halt fuel imports entirely. Despite the opening of the Dangote refinery and the projected end of Nigeria’s fuel import dependency, the market remains in flux, with the NNPC maintainingmaintaining a critical role in fuel distribution.

In a further development, President Bola Tinubu recently directed that crude oil sales to local refineries, including Dangote, be conducted in naira. This move aims to reduce Nigeria’s dependence on foreign exchange for fuel imports, potentially saving the country $7.3 billion annually in foreign exchange expenditure.

Despite these efforts, NNPC remains cautious about fully committing to Dangote’s refinery, with officials emphasizing that purchases from the refinery will depend on whether its prices remain competitive in comparison to international imports. NNPC’s recent statement reiterated that it would only source petrol from Dangote if global prices justify it.