NNPCL Cut Ties With Dangote Refinery, Announces End Of Purchasing Deal
The Nigerian National Petroleum Company Limited (NNPCL) is ending its exclusive purchase agreement with Dangote Refinery, a move that opens the market for other petroleum marketers to directly buy petrol from the refinery, Premium Times has reported, citing sources.
This is coming as the Nigerian government’s arrangement to sell crude oil to Dangote Refinery in naira, which is expected to reduce the cost of petroleum products, kicks off.
This significant shift signals a change from NNPC’s earlier role as the sole off-taker of Dangote Refinery’s products and aligns with current market practices for deregulated products, where refineries sell on a willing buyer, willing seller basis.
This development follows a statement by Devakumar Edwin, vice president at Dangote Industries Limited, who, in September, announced that Dangote Refinery had commenced processing petrol and that NNPC would buy its products exclusively. However, NNPC has since clarified that the refinery, like any other domestic refinery, could sell its products to any marketer under the deregulated system. Despite this, NNPC initially began loading petrol from the refinery exclusively in mid-September, leaving independent marketers out of the equation.
Tensions around this exclusive arrangement escalated, leading to a motion in the House of Representatives on September 26. The motion, introduced by Oboku Oforji (PDP, Bayelsa), called for the federal government to mandate NNPC and Dangote Refinery to allow independent marketers access to lift petrol directly from the refinery.
Oforji argued that excluding independent marketers threatened competition in the sector and warned that such practices could lead some marketers to resort to importing products to stay competitive, which could further complicate Nigeria’s fuel supply dynamics.
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