Fingers crossed
The Nigerian National Petroleum Company (NNPC) Limited has said it will not be the sole gasoline buyer from Dangote refinery but will step…
The Nigerian National Petroleum Company (NNPC) Limited has said it will not be the sole gasoline buyer from Dangote refinery but will step in if the facility sells above pump prices. The refinery had said NNPC would be the sole buyer of its petrol and that the government would set prices. However, the NNPC stated that Dangote would set its gasoline price and sell directly to marketers, who distribute to fuel stations. “The NNPC Ltd. will only fully offtake PMS from the DRL (Dangote Refinery Ltd) if the market prices of PMS are higher than the pump prices in Nigeria,” NNPC said.
It would have been more helpful if NNPC had provided more details in its statement. A likely interpretation is that NNPC’s recent price hike at its retail outlets was made after reviewing the numbers and possibly holding discussions with DRL to ensure that NNPC’s retail price (around ₦897) aligns with Dangote’s selling price, thus making subsidies unnecessary. The statement also mentioned that NNPC will not be the sole buyer, suggesting that other major marketers are likely to purchase from DRL, transport the product, and sell it at around the current price without the need for NNPC’s subsidy. For this to occur, DRL would have to produce the product at a price significantly lower than the global average. A good reference is the price at which a litre of the product is sold in West Africa, which ranges between $0.80 and $1.00 (equivalent to ₦1,300 — ₦1,600). Only time will tell what will happen.