MARKETERS SEEK DIRECT FUEL PURCHASE FROM DANGOTE REFINERY, AIMING TO BYPASS NNPC
1. Oil Marketers’ New Strategy: Independent petroleum marketers in Nigeria, under associations such as the Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), are making moves to purchase Premium Motor Spirit (PMS) directly from Dangote Petroleum Refinery. This is a shift from the current practice where marketers buy through the Nigerian National Petroleum Company Limited (NNPC).
2. Current Supply Chain Dynamics: At present, NNPC is the sole off-taker of petrol from the $20 billion Dangote Refinery, located in Lekki, Lagos. Other oil marketers access PMS through NNPC, which acts as an intermediary, distributing fuel to retailers. Marketers now want to cut out this middleman and establish a direct buying relationship with Dangote.
3. Efforts to Engage Dangote Refinery: IPMAN officials have begun initiatives to meet with Alhaji Aliko Dangote or his refinery management to discuss direct purchase arrangements. Although no meeting date has been fixed, IPMAN leaders are optimistic about reaching an agreement. Terlumun James, Secretary of IPMAN, emphasized the need for direct dealings, noting that it is logical to buy straight from the refinery rather than a competitor like NNPC.
4. Concerns Over NNPC’s Role: The marketers view NNPC as a competitor and believe that dealing directly with Dangote will streamline fuel distribution and eliminate unnecessary intermediaries. They argue that NNPC’s involvement complicates market dynamics, and a direct supply chain would lead to better availability of PMS for their numerous filling stations across Nigeria.
5. Market Competitiveness and Deregulation: Chinedu Ukadike, a spokesperson for IPMAN, stated that with the deregulation of the petroleum market, there should be a "willing-buyer, willing-seller" model. This will ensure transparency and competition in pricing. Ukadike further noted that IPMAN would continue to source fuel from other suppliers, including NNPC, if Dangote does not agree to sell directly to them.
6. Support for Dangote and Calls for Competition: The Nigerian Economic Summit Group (NESG) has urged the government to support Dangote's refinery but also called for more competition in the downstream sector to prevent a monopoly. NESG CEO Dr. Tayo Adeloju stressed the importance of having multiple operators in the market to manage monopolistic tendencies. He also highlighted the government's international commitment to lowering inflation through cheaper PMS from the Dangote refinery.
7. Major Marketers’ Early Access: Members of the Major Oil Marketers Association of Nigeria (MOMAN) have already begun lifting fuel from Dangote’s refinery. Over 50 million liters of PMS were reportedly lifted by MOMAN in the past week. However, it is unclear whether they are purchasing directly from Dangote or through NNPC.
8. Federal Government’s Stance: The Federal Government has made it clear that it will not interfere in any pricing conflicts between NNPC and Dangote. Special Adviser to the President on Information and Strategy, Bayo Onanuga, stated that the petroleum market has been deregulated, allowing both Dangote and NNPC to set their pump prices based on market forces. He further emphasized that the government’s role is not to mediate between private companies in a deregulated sector.
9. Future Investments and Refinery Expansion: Alhaji Aliko Dangote, president of Dangote Group, has plans to reinvest the profits from his refinery into other local businesses. Inspired by Mukesh Ambani of Reliance Industries in India, Dangote aims to diversify beyond fuel and expand his business empire, potentially making Nigeria less reliant on fuel imports.
10. Pricing Controversy: A pricing dispute arose on September 15, 2024, when NNPC claimed that it bought petrol from the Dangote refinery at N898 per liter. Dangote refuted this, stating that NNPC’s pricing includes additional costs, such as profit margins, and emphasized that the actual price of its fuel is about 15% lower than imported products.
1. Oil Marketers’ New Strategy: Independent petroleum marketers in Nigeria, under associations such as the Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), are making moves to purchase Premium Motor Spirit (PMS) directly from Dangote Petroleum Refinery. This is a shift from the current practice where marketers buy through the Nigerian National Petroleum Company Limited (NNPC).
2. Current Supply Chain Dynamics: At present, NNPC is the sole off-taker of petrol from the $20 billion Dangote Refinery, located in Lekki, Lagos. Other oil marketers access PMS through NNPC, which acts as an intermediary, distributing fuel to retailers. Marketers now want to cut out this middleman and establish a direct buying relationship with Dangote.
3. Efforts to Engage Dangote Refinery: IPMAN officials have begun initiatives to meet with Alhaji Aliko Dangote or his refinery management to discuss direct purchase arrangements. Although no meeting date has been fixed, IPMAN leaders are optimistic about reaching an agreement. Terlumun James, Secretary of IPMAN, emphasized the need for direct dealings, noting that it is logical to buy straight from the refinery rather than a competitor like NNPC.
4. Concerns Over NNPC’s Role: The marketers view NNPC as a competitor and believe that dealing directly with Dangote will streamline fuel distribution and eliminate unnecessary intermediaries. They argue that NNPC’s involvement complicates market dynamics, and a direct supply chain would lead to better availability of PMS for their numerous filling stations across Nigeria.
5. Market Competitiveness and Deregulation: Chinedu Ukadike, a spokesperson for IPMAN, stated that with the deregulation of the petroleum market, there should be a "willing-buyer, willing-seller" model. This will ensure transparency and competition in pricing. Ukadike further noted that IPMAN would continue to source fuel from other suppliers, including NNPC, if Dangote does not agree to sell directly to them.
6. Support for Dangote and Calls for Competition: The Nigerian Economic Summit Group (NESG) has urged the government to support Dangote's refinery but also called for more competition in the downstream sector to prevent a monopoly. NESG CEO Dr. Tayo Adeloju stressed the importance of having multiple operators in the market to manage monopolistic tendencies. He also highlighted the government's international commitment to lowering inflation through cheaper PMS from the Dangote refinery.
7. Major Marketers’ Early Access: Members of the Major Oil Marketers Association of Nigeria (MOMAN) have already begun lifting fuel from Dangote’s refinery. Over 50 million liters of PMS were reportedly lifted by MOMAN in the past week. However, it is unclear whether they are purchasing directly from Dangote or through NNPC.
8. Federal Government’s Stance: The Federal Government has made it clear that it will not interfere in any pricing conflicts between NNPC and Dangote. Special Adviser to the President on Information and Strategy, Bayo Onanuga, stated that the petroleum market has been deregulated, allowing both Dangote and NNPC to set their pump prices based on market forces. He further emphasized that the government’s role is not to mediate between private companies in a deregulated sector.
9. Future Investments and Refinery Expansion: Alhaji Aliko Dangote, president of Dangote Group, has plans to reinvest the profits from his refinery into other local businesses. Inspired by Mukesh Ambani of Reliance Industries in India, Dangote aims to diversify beyond fuel and expand his business empire, potentially making Nigeria less reliant on fuel imports.
10. Pricing Controversy: A pricing dispute arose on September 15, 2024, when NNPC claimed that it bought petrol from the Dangote refinery at N898 per liter. Dangote refuted this, stating that NNPC’s pricing includes additional costs, such as profit margins, and emphasized that the actual price of its fuel is about 15% lower than imported products.