New Fuel Price Looms as FG, NNPC, Dangote Refinery Agree on New Petrol Lifting, Subsidy Payment
- The Nigerian government, the NNPC and the Dangote Refinery have struck a new deal on petrol lifting from the facility
- The new arrangement reportedly allows NNPC to continue to subsidise petrol from the refinery but ceases to act as the sole off-taker
- The deal will now allow oil marketers to purchase petroleum products directly from the refinery
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigerian government, the Nigerian National Petroleum Company Limited (NNPC), and the Dangote Refinery are in the advanced stages of planning to change the lifting and distribution of petrol from the facility.
The new arrangement allows the NNPC to continue paying subsidies on refinery petroleum products.
Source: UGC
NNPC to cease sole distributorship of Dangote petrol
Findings show that petrol prices from the refinery hovers around N1,600 per dollar due mainly to the exchange rate volatility.
However, under the new arrangement, the NNPC would provide crude oil but stop acting as a middleman in distributing petrol and other petroleum products from the $20 billion refinery.
The new arrangement will allow oil marketers and depot owners to negotiate with refinery management to buy petrol directly from the mega refinery.
According to a Vanguard report, the details of the new deal have been developed for review by the implementation Committee on Crude Oil Sales in naira, which has been fixed for Wednesday, October 9, 2024, in Abuja.
The report said a source confirmed the arrangement, which has been widely criticised.
Marketers to begin direct petrol purchases from Dangote
If agreed upon, the new arrangement would open up the market for players in the petroleum industry, including Major, Independent, and depot owners, to participate in the sector.
The report said the subsidy to be paid by NNPC would finally be removed, allowing consumers to pay for the petrol value.
The report disclosed that marketers see the development as a good, stating that it will allow for fair competition and improve petrol availability nationwide.
The managing director of 11Plc, Adetunji Oyebanji, disclosed that only companies with enough funds and resources can afford the new arrangement.
Marketers express optimism over new deal
He said that NNPC initially became the sole distributor of Dangote petrol and kept the price low. However, if marketers began directly purchasing the product from the refinery, they could sell it higher or lower, depending on the purchase price.
Robert Dickerman, Pinnacle Oil and Gas CEO disclosed that Dangote’s petrol production would not reduce prices, saying that crude oil and petroleum products are priced in US dollars.
Dangote to process 24 million barrels of crude
Legit.ng earlier reported that the Dangote Refinery is ready to process about 400,000 barrels of crude daily over the next two months and will reach full capacity in the coming months.
Bloomberg reports that a cargo allocation list shows the plant is set to get about 24 million barrels of crude in October and November, showing a shift towards using more domestic supplies.
Dangote crude demand to crash Nigeria’s export
Analysts believe the increased demand from the 650,000 bdp-capacity refinery could significantly tighten the West African crude oil market in the last quarter of 2024.
Ronan Hodgson, an analyst at FGE, disclosed that the substantial intake by the $20 billion refinery could push Nigeria’s crude exports below one million barrels daily due to its high demand.
FG begins crude oil sales in naira
The report also said that some shipments may face delays, with two cargoes in October’s schedule initially postponed from September.
Despite the delays, the volume slated for the coming months is higher than the refinery’s average intake of 255,000 barrels daily in the first half as it gradually builds up its operations.
Also, the Nigerian government disclosed that it has begun selling crude oil to Dangote and other local refineries in naira, a development the refinery management confirmed. Still, it said they are yet to receive the consignment.
Marketers announce a drop in landing costs
Legit.ng previously reported that the landing cost of petrol had dropped further from the N981 per litre recorded on September 25, 2024, to N945.63 per litre, beginning from September 27, 2024.
Major Energy Marketers Association of Nigeria (MEMAN) revealed this in its Competency Centre Energy Bulletin Data.
The decrease represents a significant decline in the commodity’s price from the one recorded in July when it was N1,130 per litre.
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Source: Legit.ng
