NNPC Ltd, Nigeria's state-owned oil firm, has clarified its position regarding gasoline purchases from the newly operational Dangote refinery. The company stated it would not be the exclusive buyer of the refinery's output, contradicting earlier reports.
The 650,000 barrel-per-day Dangote refinery, located in the Lekki Free Zone near Lagos, commenced gasoline production earlier this week. This development marks a significant milestone for Nigeria, potentially ending decades of reliance on imported fuel that has cost the country billions of dollars annually.
NNPC Ltd emphasized that Dangote refinery has the autonomy to set its own gasoline prices and sell directly to marketers. However, the state-owned company will intervene if the refinery's prices exceed current pump prices in Nigeria.
"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."
This clarification comes in the wake of NNPC Ltd's recent price hike, which saw the cost of petrol rise from an average of 617 naira to 855 naira per liter. The move reflects the ongoing changes in Nigeria's petroleum sector following the deregulation of the downstream segment in 2023.
The Dangote refinery, founded by Aliko Dangote, Africa's wealthiest individual, is set to supply 25 million liters of gasoline daily to the domestic market this month. This volume is expected to increase to 30 million liters daily from October 2024.
As the largest single-train refinery globally, the Dangote facility represents a $19 billion investment in Nigeria's oil industry. It boasts state-of-the-art technology from American and European suppliers, capable of producing Euro-V quality gasoline and diesel. The refinery's operations are expected to create thousands of direct and indirect jobs, providing a significant boost to the Nigerian economy.
The refinery's commencement of operations marks a turning point for Nigeria, which has paradoxically been a major crude oil exporter while relying heavily on imported refined petroleum products. This situation arose due to the prolonged non-functionality of Nigeria's four state-owned refineries.
With its own marine terminal capable of handling large crude oil vessels, the Dangote refinery is well-positioned to transform Nigeria's petroleum landscape. As the country navigates this new era of domestic refining capacity, the interplay between NNPC Ltd, Dangote refinery, and market forces will be crucial in shaping the future of Nigeria's energy sector.