FG Gives Strict Orders to Oil Marketers on Dangote Petrol as NNPC Ends Agreement with Refinery

• The Nigerian government gave express permission to oil marketers to initiate direct purchase of petroleum products from local refineries
• Specifically, the government disclosed that marketers can now negotiate petrol purchases from Dangote and other refineries
• The development comes as the Nigerian National Petroleum Company Limited (NNPC) ended its agreement with the Dangote Refinery

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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

On Friday, October 11, 2024, the Nigerian government directed petroleum marketers to lift petroleum products, especially PMS, from the Dangote Refinery.

The government’s approval ends the Nigerian National Petroleum Company Limited's (NNPC) role as the sole distributor of the refinery’s petrol, leading to the total deregulation of the downstream oil sector.

FG directs marketers to begin direct petrol purchases

The Naira-For-Crude Sale Implementation committee chairman and minister of Finance, Wale Edun, said the development is part of the government’s bigger plan to deregulate the petroleum market and encourage competition.

Edun updated Nigerians on the new deal to sell crude oil to local refineries in naira, allowing refiners easy access to the product.

He confirmed that petroleum marketers can purchase petrol directly from local refineries, including the Dangote Refinery, without going through the NPPC.

He said:

“The Federal Executive Council’s directive has successfully transitioned operations, enabling local production and distribution of crude oil and refined products in naira,” Edun said.

“Petroleum marketers are now encouraged to initiate direct purchases from refineries on commercially negotiated terms, enhancing competition and market efficiency.”

New arrangement eliminates middleman’s role

The new arrangement, which includes the commencement of local production, is a crucial step in deregulating Nigeria’s oil sector.

The government believes the measures will create more favourable market conditions for Nigerians.

The committee noted the smooth implementation of the directive, setting the stage for improved market dynamics in the oil industry.

Marketers demand N15 billion refund from NNPC

Legit.ng previously reported that the Independent Petroleum Marketers Association of Nigeria (IPMAN) had threatened to stop operations nationwide due to the high cost of petrol sold to its members by the NNPC.

The association disclosed on Thursday, October 10, 2024, that the cost of petrol from the Dangote Refinery was about N987 per litre, noting that the state oil company sold the product to marketers at N1,010 per litre in Lagos.

Marketers are still loading subsidised petrol

IPMAN threatened to embark on strike, demanding a refund from NNPC for earlier petrol supply payments made by its members.

Analysts believe the situation could worsen the petrol scarcity and queues nationwide.

Punch reports that on Thursday, October 10, 2024, Major Energies Marketers Association of Nigeria (MEMAN) were still loading subsidised petrol from Dangote Refinery on earlier arrangements with the NNPC.

Chinedu Ukadike, IPMAN's national publicity secretary, said the association may be forced to take action if the issue with NNPC is not resolved.

The national president of IPMAN, Abubakar Maigandi, disclosed that NNPC asked its members to buy petrol from its depot in Lagos at N1,010 per litre.

He stated that the price was higher than what NNPC paid for the product at the Dangote Refinery.

Oil marketers give reasons petrol prices may crash again

Legit.ng earlier reported that the latest data from the Major Energies Marketers Association of Nigeria (MEMAN) showed that petrol landing cost had dropped to N975.89 per litre.

Crude oil prices and forex are the major drivers of petroleum product prices, including petrol, aviation fuel and kerosene.

According to a BusinessDay report, Brent Crude sold for $77. 41 per barrel, dropping by 60 cents, or 0.8%, while US West Texas Intermediate (WTI) futures sold at $73.24 per barrel, representing a 0.5% drop in price.

Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng