"I Did the Mathematics": Expert Explains Why Dangote Refinery May Not Sell Petrol Below NNPC Price

"I Did the Mathematics": Expert Explains Why Dangote Refinery May Not Sell Petrol Below NNPC Price

  • An industry expert has stated that the Dangote Refinery may not sell petrol at a price lower than the rate sold at NNPC retail outlets
  • He said that the need to recoup investments gives Dangote the right to set the price for the petrol his refinery produces
  • Adigun listed other factors that would determine the price that Dangote Refinery would set for its petroleum product

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the Stock Market.

Oil and gas specialist Henry Adigun has pointed to production costs, which are priced in US dollars, as a key factor preventing the $20 billion Dangote Refinery from offering petrol at a price lower than the current rate at Nigerian National Petroleum Company Limited (NNPCL) retail outlets.

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“Will not sell below market value”: Sources hint at new petrol price from Dangote refinery

Speaking on Channels Television’s socio-political program Inside Sources, hosted by Laolu Akande, Adigun explained on Friday that the petrol produced at the refinery is of the highest global quality, and with better quality comes higher pricing.

Dangote Refinery faces constraints in undercutting NNPCL rates
Dangote stated that once his company completes arrangements with NNPCL, the product will be available in the market. Photo credit - Dangote Group, Energy Matters
Source: UGC

Nigeria's petrol crisis

Nigeria, the most populous country in Africa, is grappling with petrol issues, as none of its state-owned refineries are currently operational.

The nation depends largely on imported refined petroleum, with the state-owned NNPC Limited being the main importer of these vital resources.

Since the removal of fuel subsidy in May 2023, petrol prices have tripled, worsening the challenges faced by citizens who rely on petrol to power their vehicles and generators due to a long-standing unreliable electricity supply.

Dangote will not sell at a loss

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Dangote to set own petrol prices as NNPC gives date to begin product lifting from refinery

The expert explained that the fuel industry operates in US dollars, giving Aliko Dangote, the billionaire businessman and owner of the refinery, the right to set the price for the petrol his refinery produces.

Adigun also noted that Dangote receives only 40% of the crude oil from NNPC, while he has to spend additional funds to purchase the rest from countries like the United States and others.

He said:

“And I keep telling everybody, the man (Dangote) did not take the loan in naira; he took it in dollars and he has to pay the loans back in dollars.
“He cannot. I did the mathematics of his refinery and I said it in the meeting we had with his people and his team that there is no way your petrol will come out at less than N850. There is also retail cost.”

Petrol prices at NNPCL outlets across the country were increased from approximately N568 to more than N855.

Read also

NNPC gves Nigerians hope, speaks on petrol scarcity, pump price increase

Dangote stated that once his company completes arrangements with NNPCL, the product will be available in the market.

NNPCL later announced that it plans to begin sourcing fuel from the Dangote Refinery by mid-September.

NNPC not yet lifting petrol, Dangote Refinery says

In related news, Legit.ng earlier reported that Dangote Refinery has issued a statement on a report alleging that the NNPC has begun lifting from its facility in Lagos.

The company revealed this in a statement signed by Anthony Chiejine, the company’s Group Chief Branding and Communications Officer.

According to the statement, the NNPC has yet to commence product lifting at the refinery, let alone setting a price, stating that the PMS market is heavily regulated.

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Source: Legit.ng

Authors:
Victor Enengedi avatar

Victor Enengedi (Business HOD) Victor Enengedi is a trained journalist with over a decade of experience in both print and online media platforms. He holds a degree in History and Diplomatic Studies from Olabisi Onabanjo University, Ogun State. An AFP-certified journalist, he functions as the Head of the Business Desk at Legit. He has also worked as Head of Editorial Operations at Nairametrics. He can be reached via victor.enengedi@corp.legit.ng and +2348063274521.