The Nigerian National Petroleum Company (NNPC) has ended its exclusive purchase agreement with Dangote Refinery, meaning it is no longer the sole off-taker of petrol from the refinery.
According to a report from Premium Times, this decision opens the market to other fuel marketers, allowing them to purchase directly from Dangote Refinery. This move is in line with the government’s objective to fully deregulate petroleum products and allow market forces to operate on a willing buyer, willing seller basis.
Background on the Controversy
A controversy arose in September when Dangote Refinery began selling petrol. Devakumar Edwin, Vice President at Dangote Industries Limited, initially reported that NNPC was the exclusive buyer of petrol from the refinery. However, this claim was soon challenged by NNPC, which clarified that it was not the sole buyer. NNPC asserted that other marketers were entitled to purchase petrol directly from the refinery, again citing the government’s deregulation policy.
Despite this clarification, by mid-September, NNPC had started loading petrol from Dangote Refinery while independent marketers were reportedly still excluded. This situation prompted the House of Representatives to intervene, calling for an end to the exclusive agreement and for independent marketers to be granted access to purchase petrol from the refinery. One lawmaker remarked, “NNPCL and the major marketers being the exclusive off-takers spells monopoly, which is tantamount to greed. This is the same NNPC Ltd that has failed to manage our crude and refineries for decades.”
Shift in NNPC’s Policy
Those familiar with the matter confirmed to Premium Times that NNPC has now agreed to withdraw as the sole off-taker, thereby allowing other marketers to directly purchase petrol at market prices. This development is expected to foster competition and potentially stabilize Nigeria’s fuel supply chains.
An NNPC official noted, “Yes, it is true. We can no longer continue to bear that burden.”
The NNPC had earlier stated in September that it was purchasing petrol from Dangote Refinery at N898.78 per litre while selling it to marketers at N765.99 per litre, effectively shouldering a subsidy of almost N133 per litre. During the second half of September, NNPC lifted about 103 million litres of petrol from Dangote Refinery. However, the refinery managed to load only 2,207 of the 3,621 trucks sent to it, delivering just 102,973,025 litres out of the planned 400,000,000 litres for the period.
Why it Matters
By ending its exclusive agreement with Dangote Refinery, NNPC will no longer provide subsidies to marketers purchasing petrol. This shift is expected to introduce more competition into Nigeria’s petroleum market, aligning with the government’s goal of fully deregulating the sector. It also signals a move towards a more market-driven approach to the pricing and distribution of petroleum products in the country.
