Major oil marketers in Nigeria are set to begin direct purchases of Premium Motor Spirit (PMS), commonly known as petrol, from the Dangote Petroleum Refinery between Thursday and next week. This shift comes as the Nigerian National Petroleum Company Limited (NNPCL) pulls out as the sole off-taker of the product from the $20 billion refinery. According to multiple sources from both the NNPC and the Major Oil Marketers Association of Nigeria (MOMAN), NNPC is no longer the exclusive buyer of Dangote petrol, opening the door for other players in the downstream oil sector to purchase the product directly.
The development comes as unconfirmed reports circulated, suggesting that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had released new petrol price templates, which indicate a significant price increase from the current pump prices. When contacted for comment, NMDPRA spokesman George Ene-Ita did not confirm the new prices, nor did he respond to follow-up inquiries at the time of this report. However, oil marketers expressed their belief that the Federal Government has effectively ended the subsidy on petrol, following NNPC’s exit as the sole off-taker of Dangote petrol.
A senior official from a major oil marketing company confirmed on Tuesday that, while the formal directive to begin direct purchases from Dangote was issued, marketers have not yet started loading petrol directly from the refinery. “It is not true that major marketers have started lifting PMS from the Dangote refinery. Rather, we were made to understand that the directive to start buying directly from them (Dangote refinery) was given today,” the official, who preferred to remain anonymous, stated. He emphasized that NNPC’s withdrawal from subsidizing Dangote petrol signals the end of the government’s petrol subsidy program, and he confirmed that no prices had yet been set by Dangote for direct purchases.
The news of NNPC’s exit from its role as sole off-taker is expected to have broader implications for the petrol market, with petrol prices anticipated to rise. According to sources, this move marks the beginning of market-driven pricing for petrol, as the prices will no longer be subsidized by the government. “NNPC is no more going to be the sole off-taker of Dangote petrol. The prices of petrol are now going to be determined by market forces,” a management staff of NNPC disclosed. Additionally, the new petrol price templates from NMDPRA suggest a sharp increase in pump prices across major cities. For instance, in Abuja, the indicative pump price is projected to rise to N1,029.01 per litre, up from the current N897 per litre.
In Lagos, the indicative pump price is estimated at N991.21, compared to the current price of N855. Other cities like Kano and Sokoto are also expected to see price hikes, with indicative prices of N1,040.31 and N1,045.72 per litre, respectively. While NMDPRA has not officially confirmed the details of the new prices, oil marketers and industry experts have expressed concerns that the removal of the subsidy will lead to significant price increases. Ukadike Chinedu, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), commented, “Of course, petrol price is going to rise once the subsidy is completely removed by NNPC. Nigerians should brace for this reality.”
The shift in purchasing dynamics from NNPC to direct marketer purchases from Dangote Refinery has also added to the uncertainty in the market. As marketers prepare to engage directly with Dangote, the final pricing structures and operational logistics remain unclear. Some industry insiders believe this transition may take a few more days before the full effect is felt, with some speculating that purchases from the refinery will officially begin next week.
The move marks a significant moment in Nigeria’s ongoing struggle with fuel subsidy management and the cost of petrol. With government subsidies ending, many Nigerians can expect a rise in petrol prices, which could have far-reaching implications for the cost of living and inflation. The NNPC’s withdrawal from its role as sole off-taker reflects the government’s shift towards a more market-driven approach to pricing, although the full effects of this transition are yet to be fully realized.
