The Federal Government has authorised petroleum marketers to lift petrol directly from the Dangote refinery, bypassing the Nigerian National Petroleum Company Limited.
In a statement on Friday, the Minister of Finance and Chairman of the Naira-crude sale implementation committee, Wale Edun, provided an update on the initiation of crude purchase and product sales in naira transactions.
The committee, chaired by Edun, held its second post-commencement review meeting on October 10 to assess the progress of the Crude Oil and Refined Products Sales in Naira initiative.
According to the statement, the direct purchasing mechanism allows marketers to negotiate commercial terms directly with the refineries, fostering a more competitive market environment and enabling a smoother supply chain for petroleum products.
The statement reads, “New Direct Purchase Model: The most significant change under the new regime is that petroleum product marketers can now purchase PMS directly from local refineries. This marks a departure from the previous arrangement where the Nigerian National Petroleum Corporation (NNPCL) served as the sole purchaser and distributor of PMS from the refineries.”
“This direct purchasing mechanism allows marketers to negotiate commercial terms directly with the refineries, fostering a more competitive market environment and enabling a smoother supply chain for petroleum products.”
What you should know
The transition of the NNPCL from sole buyer of petroleum products from the Dangote refinery to marketers marks a significant shift by the Federal government towards a fully deregulated oil industry.
- In September, the NNPC announced that it was buying petrol from the Dangote Refinery at N898.78 per liter while selling it to marketers at N765.99 per liter, effectively covering a subsidy of about N133 per liter. However, the company noted that this arrangement was no longer sustainable.
- Upon the commencement of petrol production by the Dangote refinery, the NNPCL became the sole off-taker but that has changed now.
- Earlier this week, the NNPCL increased the retail price of petrol across its retail stations to over N1000 per litre. Last month, the NNPCL increased the price of petrol from N617 to over N900 per litre across its stations and in some states over N1000 per litre.
- The Federal government has been moving towards a market-determined price of petrol in the post-subsidy environment.
- In recent months, fuel queues have become a familiar scene in major cities across Nigeria, causing challenges for citizens seeking to purchase petrol. Although the fuel price increase in September has led to a reduction in these queues, they remain a common sight in some areas, including Lagos, Abuja, Ogun, and others.
