The Lagos-based Dangote Refinery has started processing premium motor spirit (PMS), commonly known as petrol, as the Nigerian National Petroleum Company (NNPC) Limited is set to become the initial exclusive buyer of its products.
This is according to a report by American media outlet, Reuters, on Monday.
The report confirmed that the refinery is ready to roll out petrol in the coming weeks as testing has begun in the 650,000 barrel per day petrochemical plant.
The vice president at Dangote Industries Limited, Devakumar Edwin, also mentioned that the national oil company is prepared to purchase its products exclusively to meet local demands.
“We are testing the product (gasoline) and subsequently it will start flowing into the product tanks.
“If no one is buying it, we will export it as we have been exporting our aviation jet fuel and diesel,” Edwin said.
He, however, did not mention when the product will hit the market.
NNPC faces supply challenges
Nairametrics previously reported that NNPC Limited has acknowledged its debt to international oil traders, which has significantly contributed to the shortage of fuel supply to local marketers.
Recent reports indicate that NNPC owes these traders approximately $6 billion in subsidy obligations, leading the traders to halt the supply of imported petrol to the national oil company.
Although NNPC initially denied these claims, the company later admitted that its outstanding debts to suppliers have been a major factor behind the ongoing fuel scarcity across the country.
“NNPC Ltd. has acknowledged recent reports in national newspapers regarding the company’s significant debt to petrol suppliers. This financial strain has placed considerable pressure on the Company and poses a threat to the sustainability of fuel supply.
“In line with the Petroleum Industry Act (PIA), NNPC Ltd. Remains dedicated to its role as the supplier of last resort, ensuring national energy security. We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide,” NNPC said.
What this means
The recent announcement that the national oil company will become the exclusive buyer of petrol from the Dangote refinery could provide much-needed relief to NNPC, which is currently grappling with its international obligations to oil traders.
If the Dangote refinery exclusively supplies NNPC, it would significantly lower importation and logistics costs, allowing local marketers to purchase petrol from NNPC at a reduced price.
This arrangement could also address the persistent fuel scarcity that has plagued the country for over a month, with little progress made by the national oil company.
With the capacity to meet domestic demand and export to other African countries, the Dangote refinery is poised to play a crucial role in stabilizing Nigeria’s fuel supply.
Additionally, the Federal Executive Council has recently approved the sale of crude oil to the Dangote refinery in local currency, on the condition that the refinery will sell processed petrol to the country in the same currency.
These developments are anticipated to contribute to a lasting solution to Nigeria’s ongoing fuel scarcity.
