NNPC DIRECTS MARKETERS TO STOP PETROL IMPORTS, CITES DANGOTE REFINERY CAPACITY
NNPC DIRECTS MARKETERS TO STOP PETROL IMPORTS, CITIES DANGOTE REFINERY CAPACITY The Nigerian National Petroleum Company Limited (NNPC) has issued a directive to oil marketers to cease the importation of petrol, asserting that the Dangote Refinery possesses sufficient capacity to meet domestic demand. BusinessDay’s findings showed this directive emerged during a high-level meeting in Abuja, attended by NNPC Group CEO Mele Kyari, representatives of the Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), and key stakeholders from companies such as 11 Plc, Matrix, AA Rano, and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) among other stakeholders. According to sources privy to the discussions, the NNPC unequivocally read the “riot act,” informing stakeholders that all petrol supply would now hinge on clearance from the Dangote Refinery. An official in attendance disclosed, “NNPC emphasised that going forward, no marketer would be permitted to import petrol without specific clearance tied to Dangote’s capacity”. The decision, while strategic, has sparked unease among oil marketers. Stakeholders raised concerns about Dangote Refinery’s ability to reliably supply the market and maintain consistent distribution across Nigeria’s expansive network. Despite its capacity, marketers questioned whether the refinery’s production and logistical systems were adequately prepared to handle the country’s fluctuating demand. Another contentious issue discussed at the meeting was the payment structure proposed by Dangote Refinery. Unlike the traditional importation system, where marketers settle payments upon product arrival at depots, Dangote insists on advance payment from marketers. This shift has raised concerns about cash flow and operational feasibility for smaller players in the downstream sector. A stakeholder highlighted, “Paying upfront significantly increases financial pressure on marketers, particularly those with limited capital. For decades, we’ve operated on a post-delivery payment model, which aligns better with our liquidity cycles.” Since starting operations in January, Dangote has sold its diesel, jet fuel and other products on the global market, mostly via traders Vitol and Trafigura and international energy company BP, according to S&P Global Commodities at Sea data. Initially, it agreed an exclusive supply agreement with NNPC for its gasoline, but by Nov. 4 had also begun selling to local marketers, the refinery executive said. The refinery has reported that its gasoline meets quality standards with a sulfur content of below 10 ppm, marking a significant improvement for the Nigerian market, for which 500 ppm was still the standard in late 2023. “There is a price differential between Dangote’s premium petrol of 10ppm and imported petrol of 50 ppm,” another source said. On Oct. 29, refinery CEO Aliko Dangote complained that the refinery was wasting money holding over 500 million liters (around 3.1 million barrels) of fuel in storage, while the company has blamed illicit low-quality imports for undercutting its prices and threatened to sue state oil company NNPC for continuing its fuel imports. Documents seen by BusinessDay during 42 days from October 1 to November 11, 2024 showed the NNPC and its partners imported 1.5 million metric tonnes of PMS, 414,018.764 metric tonnes of diesel, and 13,500 metric tonnes of jet fuel. This is worth about N3 trillion or $1.8bn. “There is a big question mark on where the marketers are sourcing their dollars from to import petrol,” a senior oil executive said. A document that provided details of imported refined products during the review period showed that companies like Bovas, AA Rano, Matrix, Fatgbems, Deepwater, Raj, T-Time, Rainoil, Prudent, Chisco, Nepal, AYM Shafa, Northwest, Shorelink, and others received petrol from different vessels in Lagos, Warri, Calabar, and Port Harcourt. Petrol importation saga Speaking on November 12 at the 42nd Nigerian Association of Petroleum Explorationists (NAPE) annual international conference in Lagos, Mele Kyari, NNPC’s group chief executive officer (GCEO), said the national oil company has…
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