Business

Why NNPC Increased Petrol Prices and Stepped Back from Its Role with Dangote On October 7, news broke that the Nigerian National Petroleum Company (NNPC) would no longer act as the sole off-taker for Dangote Refinery’s products. Insiders revealed to TheCable that this role had become an “unbearable burden” for NNPC, especially as it grapples with a $6 billion debt to international fuel suppliers. The financial pressures facing the company have significantly impacted its ability to ensure a consistent petrol supply. In a recent Bloomberg interview, Aliko Dangote, chairman of Dangote Industries Limited, called on the federal government to eliminate fuel subsidies, labeling them as unsustainable. Consequently, NNPC will now allow other marketers to purchase fuel directly from the Dangote refinery at market prices, a move that the government had initially sought to avoid. On September 14, the federal government had mandated that the refinery sell exclusively to NNPC, with independent marketers required to acquire petrol through the national oil company. However, the House of Representatives criticized this setup on September 26, urging the government to permit independent marketers to purchase directly from the refinery. With NNPC stepping back from its distribution role, insiders anticipate a rise in petrol prices at gas stations across the country, as additional costs will likely be passed on to consumers. However, there is hope that as the market opens up, competition will help stabilize prices and supply chains in the coming days.

Published by Tope Fakinlede on October 10th, 2024.

Why NNPC Increased Petrol Prices and Stepped Back from Its Role with Dangote

NNPC

On October 7, news broke that the Nigerian National Petroleum Company (NNPC) would no longer act as the sole off-taker for Dangote Refinery’s products.

Insiders revealed to TheCable that this role had become an “unbearable burden” for NNPC, especially as it grapples with a $6 billion debt to international fuel suppliers. The financial pressures facing the company have significantly impacted its ability to ensure a consistent petrol supply.

In a recent Bloomberg interview, Aliko Dangote, chairman of Dangote Industries Limited, called on the federal government to eliminate fuel subsidies, labeling them as unsustainable. Consequently, NNPC will now allow other marketers to purchase fuel directly from the Dangote refinery at market prices, a move that the government had initially sought to avoid.

On September 14, the federal government had mandated that the refinery sell exclusively to NNPC, with independent marketers required to acquire petrol through the national oil company. However, the House of Representatives criticized this setup on September 26, urging the government to permit independent marketers to purchase directly from the refinery.

With NNPC stepping back from its distribution role, insiders anticipate a rise in petrol prices at gas stations across the country, as additional costs will likely be passed on to consumers. However, there is hope that as the market opens up, competition will help stabilize prices and supply chains in the coming days.