Marketers Plan Direct Petrol Purchase

Oil marketers are seeking to deal directly with the Dangote Petroleum Refinery instead of buying the company’s Petrol from the NNPCL.

Dealers under the aegis of the Independent Petroleum Marketers Association of Nigeria and the Petroleum Products Retail Outlets Owners Association of Nigeria said they had commenced moves that would ensure the direct purchase of petrol from the $20bn plant instead of going through NNPC.

NNPC is currently the sole off-taker of PMS from the Lekki-based refinery. Other marketers go through the national oil company to access the product from the mega refinery.

This came as the Nigerian Economic Summit Group urged the Federal Government to avoid long-term monopolies in the downstream oil sector, but should support the Dangote refinery for growth.

IPMAN officials described NNPC as a fellow competitor, stating that efforts were ongoing to meet with the President of Dangote Group, Alhaji Aliko Dangote, or some management members of the industry.

While saying no particular date has been fixed for the meeting, IPMAN leaders emphasised that buying directly from the refinery is right instead of buying from another marketer.

The Secretary of the group, Terlumun James, told our correspondent on Wednesday that IPMAN as an association of businessmen would not love to broadcast its business discussion, saying, however, that when a final business decision is taken, everyone would be carried along.

“It is right that we meet with Dangote to discuss the interest and welfare of our marketers,” Chinedu said.

When asked to disclose when the meeting is likely to be held, he said, “We don’t know yet. The issue is that, as marketers, we should also meet with the seller to know whether he can also sell to us since we are a willing buyer.”

On why the association is no longer interested in going through the NNPC, Chinedu remarked, “This is deregulation, which is an open market. So, there should be a willing-buyer, willing-seller relationship; that is what we are propagating. What is the essence of cutting corners when we can just go and buy from him (Dangote)?”

Chinedu emphasised that the association would continue sourcing PMS from other sources, including the NNPC, if Dangote refuses to sell to IPMAN.

On their part, the President of the Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, stated that the lifting of PMS by marketers directly from the Dangote refinery would create the required competition.

“Of course, we have been interfacing with officials of the Dangote refinery on the need to load petroleum products from the plant. The conversation has been ongoing, and we hope to reach a fruitful end that will be win-win for all parties.

“Accessing the product from them will deepen the competition in the space, and healthy competition is good for the downstream sector. This is why we often call for transparency in the dealings between the government through NNPC and the management of the Dangote refinery,” Gillis-Harry stated.

Meanwhile, members of the Major Energies Marketers Association of Nigeria remain the only ones lifting PMS from the Dangote refinery. It was learned that over 50 million litres of petrol were lifted from the Dangote refinery in the past week by MEMAN members.

Sources informed our correspondent that about 57 million litres were lifted from the refinery, which began the sale of gasoline on September 15.

Speaking at a webinar on Tuesday, the Chairman of MEMAN, Huub Stokman, confirmed that major marketers were loading the product from the 650,000-capacity refinery.

However, Stokman did not disclose whether or not the marketers were buying directly from the Dangote or the product bought by the NNPC.

“I can tell you that we have started loading PMS from Dangote refinery. Our members have lifted millions of litres from Dangote,” Stokman stated.

On pricing, the MEMAN chairman declined comments, saying the association was not in a position to discuss how much a company will sell its product.

The Chief Executive Officer of the Nigerian Economic Summit Group, Dr Tayo Adeloju, called for competition in the downstream oil sector but noted that the government must support the Dangote refinery.

He said, “We and Alhaji Aliko speak regularly. He is a member of the NESG, so on all the days he wasn’t sleeping at night, we too were not sleeping at night. But here is the truth, once one operator is playing in the market, it is safer to create more operators of the same type so that monopolistic tendencies are managed.

“In a perfect world, we would have said NNPC should compete with Aliko, but NNPC is not a good competitor. We think the refineries should move to a more efficient asset manager within an arrangement that works for the country. For now, whether we like Alhaji or not, that’s all we’ve got.

“And since this government went around the world saying that its inflation reduction strategy would be to provide as much support to the Dangote refinery to produce cheaper PMS, we think they should follow through with their commitment. They said it as the G20, Davos; they went around the world to say that don’t worry, inflation will come down once the Dangote refinery is mainstreamed.

“So now that it’s been mainstreamed, I don’t think the government can back down on something that it went around to say was part of the policy of the government. That is what we feel about that. But ultimately, there should be more competition. Start with Dangote but quickly allow the entrance of more competent competitors and then we will see the price of PMS begin to find its true value, as the case may be.”

Dangote to invest

In another development, the President of the Dangote Group, Alhaji Aliko Dangote, is planning to reinvest the profits from his $20 billion refinery in other local businesses.

By doing this, Dangote told Bloomberg he plans to emulate fellow billionaire, Asia’s richest person, Mukesh Ambani.

He said he would invest the profits from Africa’s biggest refinery into yet another sector, having defied warnings and completing the megafuel plant.

According to the report, Dangote visited Reliance Industries Ltd.’s Jamnagar plant in India, the world’s largest refining complex, while seeking inspiration for the 650,000 barrels per day facility.

Ambani upended India’s telecom industry with his Reliance Jio Infocomm Ltd. wireless service, by undercutting rivals and quickly becoming the nation’s biggest carrier.

The Indian tycoon lured investments from Alphabet Inc.’s Google and Meta Platforms Inc. for his digital venture in the middle of the pandemic. Ambani is now creating India’s biggest non-bank lender, Bloomberg reports.

Dangote, who has himself expanded beyond cement and food, plans to take after Ambani, who ranks over a hundred spots higher as the 12th richest person in the world, according to Bloomberg.

While his refinery construction is complete and output is ramping up, Dangote still awaits the Federal Government for the price of PMS.

The plant is likely to operate at full capacity in about four months, said the project manager for the refinery, Vartika Shukla, who is also the chairperson of Engineers India Ltd.

Dangote has recalled how he was warned by a high-ranking Saudi minister to shelve the idea of building a refinery, but he ignored the advice.

“The pressure was coming actually from different directions, the pressure of people confusing us, disturbing us every day,” he said.

Now that it’s finished, the refinery has the potential to make Nigeria one of the few nations on the continent that isn’t reliant on fuel imports.

The report states that South Africa has discussed building new refining capacity for more than a decade, but the project has gained little traction.

Ghana announced plans in August for a petroleum complex to include 300,000 barrels capacity.

It’s not something Dangote would repeat, and he doubts any government or group will be able to usurp his plant that stands as the biggest in Africa.

“Ghana will never ever do it. No one else could’ve done this,” Dangote was quoted.

Price war

The Federal Government says it will not interfere in the dispute between NNPC and the Dangote refinery over pump prices of petrol

Special Adviser to the President on Information and Strategy, Mr Bayo Onanuga, stated this when he briefed State House Correspondents at the Aso Rock Villa, Abuja.

Onanuga said since the petroleum market has been deregulated, Dangote and NNPCL, as oil refiners and marketers can set their petrol pump prices according to market forces.

“The PMS price regime has been deregulated. Dangote is a private company. NNPC should not forget it is a limited liability company. Whatever controversy both of them are having is their own problem.

“Even if you go by the terms of the Petroleum Industry Act, NNPC is on its own. Even though it is owned by the Federal Government, the state government and local councils and everything, it is operating as a limited liability company.

“You can see that the private marketers have said that they find the NNPC or Dangote price too much for them, and they may resort to importing fuel,” he explained.

On September 15, 2024, NNPCL claimed that it purchased petrol from Dangote Refinery at N898 per litre. The Dangote refinery refuted this, calling the claim misleading.

It emphasised that the pricing reflects NNPC’s additional costs, including profits and other expenses, and insisted that its petrol is about 15 per cent cheaper than imported fuel.

The dispute also came amid concerns over NNPC’s control over fuel distribution, which prevents independent marketers from accessing Dangote’s products directly. The independent marketers have since, and appealed to the government to allow them to lift petrol directly.

Speaking on Wednesday, Onanuga argued that healthy competition benefits consumers in Nigeria as competitive alternatives tend to keep prices down.

“It is the consumers who benefit if a price war starts. If NNPC fuel [price] is too much, the public market can go to the market and bring in their own fuel and sell at the price that they think is very reasonable and profitable for them. So, the government is not dabbling into this controversy.

“Dangote is running a private company working on his own, and NNPC is a limited liability company that has the right to fix the price of its own product.”