Plans have reached an advanced stage by the Federal Government, Nigerian National Petroleum Company Limited, NNPCL, and Dangote Refinery for far-reaching changes in the process of lifting and distribution of petrol in the country.
Under the current arrangement, the NNPCL allocates crude oil for refining and also undertake distribution of petrol to different parts of the nation directly and through the oil marketers and depot owners.
This arrangement enables the NNPCL to subsidise the product, which price remains high, due mainly to the low value of the Naira, currently hovering at N1, 600/$ at the unofficial market.
But under the new arrangement being considered, the NNPCL would continue to provide crude oil but seized to play such dominant role in the distribution of the product of the $20 billion refinery.
This would open up the space for oil marketers and depot owners to conclude arrangements with the management of the 650,000 bpd refinery and lift petrol directly from the facility.
Implementation Committee meets
Checks by Vanguard, yesterday, indicated that the details of the new arrangement have been developed for review at the Implementation Committee on Crude Oil Sales in Naira tentatively fixed for Wednesday this week in Abuja.
The presidency source, who confirmed the development, yesterday, said: “The current arrangement has been widely criticized. So, the proposed arrangement, if adopted, would completely open up the market for everyone, including the major, independent and depot owners to participate in the sector.
“Also, the subsidy or under-recovery that the NNPCL continues to pay would finally be removed, thus enabling consumers to pay for the whole value of the petrol.
“It is also expected that the new arrangement would remove all forms of uncertainty as well as attract local and foreign investors to invest in the sector. Certainly, we expect that additional infrastructure would be developed to deliver more value to consumers.”
Reacting, the Managing director of 11Plc, Adetunji Oyebanji, said: “This is a good development. But only companies with financial muscles can take advantage of it. Those without many resources would not be in a position to do so.
“Whatever the case may be, one has to have the financial muscle to do so. It is not about selling one or two trucks to individuals but rather it is about selling product in large quantity to big oftakers just like you have distributors. Some companies sell to distributors and also sell to marketers with smaller quantities.
“NNPCL took on that role before in order to protect the price and make sure the true price was kept in a lower level. So, if people will buy directly from Dangote, how they will sell will be dependent on how much Dangote sells to them.”
On his part, Robert Dickerman, Chief Executive Officer of Pinnacle Oil and Gas Limited, Robert Dickerman, said Dangote’s oil production will not culminate in price reduction. Dickerman, who attributed the high price of fuel in Nigeria to the low value of the Naira, said all crude oil and petroleum products are priced in United States dollars.
Dangote Refinery gets 24mb of oil in October, November
Following the agreement between the Federal Government and the Dangote Refinery for the payment of crude oil supplied to the refinery in local currency, the 650,000 barrels per day facility is set to receive 24 million barrels of oil in October and November, this year.
Bloomberg reported on Monday that Dangote oil refinery is due to take in up to 400,000 barrels a day of Nigerian crude over the coming two months as Africa’s largest plant transforms the region’s import and export markets.
It stated that the giant refinery outside Lagos is scheduled to take delivery of about 24 million barrels of Nigerian supply in October and November, as it increasingly turns to local feedstock.
The Minister of Finance and Coordinating Minister of the Economy had three days ago announced that, in line with the Federal Executive Council (FEC) directive, the sale of crude oil and refined petroleum products in Naira has officially commenced as of October 1st, 2024.
The government said following a meeting of the Implementation Committee, chaired by the Hon. Minister of Finance and Coordinating Minister of the Economy on October 3rd, 2024, to conduct a post-commencement review of the Crude Oil and Refined Products Sales in Naira initiative, the commencement of the strategic initiative was affirmed by key stakeholders.
The Presidential Committee on the Sale of Crude Oil and Refined Product had announced last month that NNPC Limited would commence the supply of 385,000 barrels of crude oil to Dangote Refinery on October 1, 2024.
The Federal Government stated: “From 1 October, NNPC will commence the supply of about 385kbpd of crude oil to the Dangote Refinery to be paid for in Naira.
“In return, the Dangote Refinery will supply PMS and diesel of equivalent value to the domestic market to be paid in Naira.
“Diesel will be sold in Naira by the Dangote Refinery to any interested off-taker. PMS will only be sold to NNPC, NNPC will then sell to various marketers for now. All associated regulatory costs will also be paid for in Naira”, he added.
