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Reasons Dangote Refinery May Shift to Exporting Petrol Amid NNPC Dispute—Local Market in Jeopardy

Published by admin on September 8th, 2024.

Reasons Dangote Refinery May Shift to Exporting Petrol Amid NNPC Dispute—Local Market in Jeopardy

The Dangote refinery might pivot to exporting its Premium Motor Spirit (petrol) due to the Nigerian National Petroleum Company Limited (NNPC) refusing to be its exclusive buyer.

NNPC’s spokesman, Olufemi Soneye, announced that the company would only purchase petrol from Dangote if it is priced below international market rates. This stance contrasts with Dangote Group President Aliko Dangote’s earlier statements that the refinery was waiting for NNPC to start buying its product.

According to NNPC, it will fully purchase petrol from Dangote’s refinery only if local prices are higher than international ones. The corporation emphasized that Dangote and other local refineries are free to sell directly to any buyer based on mutual agreement, with NNPC not intending to act as a distributor.

In response to claims by the Muslim Rights Concern (MURIC) that NNPC’s actions were undermining the refinery, NNPC clarified that fuel pricing is driven by global market conditions. They argued that recent petrol price adjustments actually present an opportunity for Dangote to offer competitive prices locally.

Dangote had previously indicated that the refinery would start supplying petrol to filling stations within 48 hours of finalizing arrangements with NNPC. However, ongoing disputes and NNPC’s recent pricing policies have led to speculation that the refinery may resort to exporting its petrol if local sales are hindered.

Devakumar Edwin, Dangote’s Vice President of Oil and Gas, revealed that the company might export its petrol if local buyers, including NNPC, do not engage with them. He expressed disappointment over the unexpected difficulties faced since the refinery’s launch, lamenting the continued importation of refined products despite Nigeria’s substantial refining capacity.

Independent Petroleum Marketers Association of Nigeria (IPMAN) has expressed willingness to purchase Dangote petrol at any price if NNPC remains unwilling to buy. However, the situation remains fluid, with continued uncertainty about the refinery’s local market presence and ongoing price volatility.

As negotiations between Dangote and NNPC face hurdles, the possibility of the refinery focusing on export markets grows, potentially impacting local petrol availability and prices.