FG Says Dangote Refinery To Sell Petrol Only to NNPCL, Gives Reasons
- The federal government has announced that NNPC Limited will be the sole buyer of Dangote refinery petrol
- There is an agreement with the government and the Dangote refinery for crude oil supply and then petrol
- Dangote Refinery is now ready to begin the distribution of petrol, starting with 25 million litres of petrol daily
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Federal Government has confirmed Sunday, September 15, 2024, as the date the Dangote Refinery will begin the distribution of petrol.
The commencement was delayed due to negotiations on pricing and supply arrangements by the Dangote Refinery and the Presidential Committee on the Sale of Crude Oil and Refined Products.
Source: Getty Images
The agreement was finalised on Friday, September 13, with the Nigerian National Petroleum Company Limited (NNPCL) as the sole off-taker of petrol produced by the Dangote Refinery, with other marketers purchasing the product directly from NNPCL.
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Punch reports that Zacch Adedeji, Chairman of the Federal Inland Revenue Service (FIRS) who is a member of the Presidential Committee on the Sale of Crude Oil and Refined Products, revealed that NNPCL will start supplying 385,000 barrels of crude oil per day to the Dangote Refinery beginning October 1, 2024, in naira.
His words:
“All agreements have been completed, and loading of the first batch of Premium Motor Spirit (PMS) from the Dangote Refinery will commence on Sunday, September 15."
He also disclosed that the Dangote Refinery will supply petrol and diesel to the domestic market, with payments for both products to be made in naira.
Why NNPC will be the sole buyer of Dangote refinery petrol
Adedeji elaborated on the terms of the deal, stating that while the refinery’s diesel will be available for purchase by any interested off-taker, petrol will be sold exclusively to NNPCL, which will then distribute the product to marketers.
His words
“From October 1, NNPCL will begin the supply of approximately 385,000 barrels of crude oil per day to the Dangote Refinery, to be paid for in naira.
“In return, the refinery will supply PMS and diesel of equivalent value to the domestic market, also payable in naira.
"Diesel will be sold in Naira by the Dangote Refinery to any interested off-taker, while PMS will be sold only to NNPCL. NNPCL will then distribute the petrol to various marketers, with all associated regulatory costs also being paid in naira.”
This agreement is expected to alleviate the ongoing petrol shortage across Nigeria and ensure a steady product supply.
Additionally, it allows the government to maintain its fuel subsidy scheme, a contentious issue recently due to the rising cost of imported fuel.
Dangote refinery imports 11 million barrels of crude from US
Legit.ng previously reported that while looking to begin production in July, the Dangote refinery imported 11 million barrels of crude oil from the US.
The refinery has placed a tender for five million barrels of West Texas Crude and another six million barrels for September.
The refinery management has accused international oil companies (IOCs) of inflat me4123`3`ing premium prices above international costs.
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Source: Legit.ng
