By Karen James
Oil marketers in Nigeria are becoming increasingly concerned about the delay in announcing the price of Premium Motor Spirit (PMS), commonly referred to as petrol, produced by the Dangote Petroleum Refinery. They note that the current landing cost of imported PMS is around N1,120/litre, and fear that a high price from the Dangote refinery would lead to increased importation of the commodity by marketers. This situation has arisen due to the government opening up the market for competition.
In July of this year, the Major Energies Marketers Association of Nigeria revealed that the landing cost of PMS was N1,117/litre. However, the Nigerian National Petroleum Company Limited, along with some independent dealers, raised their pump prices to above N1,000/litre. This has sparked concerns among oil marketers, who are considering importing the product to ensure availability and competition.
Abubakar Maigandi, the National President of the Independent Petroleum Marketers Association of Nigeria, stated that the association was in discussions with foreign partners to calculate the landing cost of petrol and determine if it is cheaper than what the Dangote refinery will sell. Maigandi emphasized that if the landing cost is cheaper, independent marketers will consider importing the commodity. He added that multiple importers of PMS would ensure availability and competition in the market.
The Dangote Group, however, is determined to beat down the price of petrol. An official of the group stated that the President of the group, Aliko Dangote, is a nationalistic man who is ready to make sacrifices for the sake of the masses. The official recalled how the refinery brought down the price of diesel before, and confirmed that the Dangote Group is ready to sell PMS locally whether or not the Nigerian National Petroleum Company Limited agrees to be its off-taker.
Despite the Dangote refinery’s efforts, the Nigerian National Petroleum Company Limited has stated that it will not buy Dangote PMS unless it is cheaper than the international market price. The NNPC also emphasized that it has no desire or intention to become the distributor for any entity in a free market environment. This indicates that the NNPC is not ready to stop importation, especially as its own refineries have yet to become operational.
The talks between the NNPC and the Dangote refinery seem to have collapsed, which means that fuel importation will continue to cost Nigeria N2tn every month, at least until the government refineries are fixed. The Dangote refinery had previously announced that it would roll out petrol once the NNPC was ready, but the current situation suggests that this arrangement may not come to fruition.
