NNPC still sole Dangote petrol buyer – Marketers

Contrary to recent speculation about the liberalization of access to petrol from the Dangote refinery, petroleum marketers have clarified that the Nigerian National Petroleum Company (NNPC) remains the sole off-taker of the refinery’s petrol output. Despite expectations that marketers would soon be able to purchase petrol directly from the facility, industry insiders have confirmed that the NNPC continues to be the exclusive buyer, maintaining its central role in the country’s fuel distribution system.

The Dangote refinery, which was commissioned in 2023, is Africa’s largest refinery and was seen as a game-changer in Nigeria’s efforts to reduce its reliance on imported petroleum products. With a capacity to produce up to 650,000 barrels of crude oil per day, the refinery is expected to meet both local demand and export requirements. However, the current arrangement with NNPC as the sole purchaser of petrol has left many independent petroleum marketers sidelined, raising questions about the future of fuel distribution in Nigeria.

### Marketers Call for Market Access

Independent petroleum marketers, who play a key role in the distribution of fuel across Nigeria, have expressed concern about the continued exclusivity of the NNPC’s role as the sole buyer from the Dangote refinery. Many had hoped that the commissioning of the refinery would introduce more flexibility in the supply chain, allowing them to negotiate directly with the refinery for petrol purchases. Such access would have provided more competition in the downstream sector, potentially leading to better prices and improved supply stability.

However, according to industry sources, the NNPC has maintained tight control over the refinery’s petrol output, citing the need for a stable supply to meet domestic demand and safeguard national fuel reserves. This arrangement has frustrated independent marketers, who argue that greater access to the refinery’s petrol would enhance efficiency and competitiveness in the market.

“We are still unable to purchase petrol directly from the Dangote refinery, and this is limiting our ability to diversify our supply channels and offer more competitive prices to consumers,” said a spokesperson for the Independent Petroleum Marketers Association of Nigeria (IPMAN). “We urge the government and the NNPC to reconsider this arrangement and allow independent marketers to purchase directly from the refinery.”

### NNPC’s Strategic Role

The NNPC’s position as the sole buyer from the Dangote refinery is part of a broader strategy by the government to manage fuel supply and distribution in the country. As the national oil company, the NNPC has historically been responsible for ensuring that the domestic market is adequately supplied with petroleum products, particularly petrol. The organization plays a central role in importing refined products, which are then sold to marketers and distributed across Nigeria.

Given the importance of petrol in the daily lives of Nigerians and its critical role in the economy, the government has long been cautious about liberalizing the downstream sector. Fuel scarcity, caused by supply disruptions, can lead to widespread social unrest and economic disruptions, which the government is keen to avoid. As a result, the NNPC has been empowered to take on the role of sole purchaser to ensure that domestic fuel needs are met and to prevent hoarding or price manipulation by private players.

However, this centralized approach has also been criticized for stifling competition in the market and limiting the potential benefits that could arise from greater private sector involvement. Independent marketers have argued that a more open system, where they can purchase directly from refineries, would lead to increased efficiency and reduce the risk of supply bottlenecks.

### Government’s Response and Future Outlook

While the NNPC’s role as the sole petrol buyer from the Dangote refinery has been reaffirmed, there are indications that the government may be considering changes to the fuel distribution system in the future. President Bola Tinubu’s administration has been exploring a range of reforms aimed at deregulating the petroleum sector, with the goal of promoting competition and attracting private investment.

One of the key components of these reforms is the eventual removal of fuel subsidies, which have long been a financial burden on the government. By reducing its direct involvement in the fuel market and allowing private players greater access to refineries like Dangote’s, the government hopes to foster a more competitive market that is less reliant on state intervention.

However, the transition to a fully deregulated market is expected to be gradual. In the short term, the government is likely to maintain tight control over fuel distribution to ensure price stability and prevent shortages. The NNPC’s role as the sole buyer from the Dangote refinery is seen as a necessary step in this process, ensuring that the market remains stable as the country navigates the complexities of reforming its petroleum sector.

Despite the continued exclusivity of the NNPC’s arrangement with the Dangote refinery, industry experts believe that changes are on the horizon. The long-term vision for the sector includes greater competition and increased private sector participation, which could eventually lead to a more liberalized market where independent marketers have direct access to refineries.

### Implications for Consumers

For consumers, the current arrangement means that fuel prices and availability will continue to be largely determined by the NNPC, which controls the distribution of petrol from the Dangote refinery. While this may ensure short-term price stability, some industry stakeholders argue that it could limit the potential benefits of competition, which might otherwise lead to lower prices and improved service delivery.

In the long term, the shift towards a more open market could have significant benefits for Nigerian consumers. If independent marketers are eventually allowed to purchase directly from refineries, the increased competition could lead to more efficient distribution networks and better access to fuel, particularly in remote areas where fuel shortages are common.

However, the timing of such changes remains uncertain, and it is likely that the NNPC will continue to play a central role in the petroleum sector for the foreseeable future. For now, the exclusive arrangement with the Dangote refinery underscores the government’s cautious approach to fuel market liberalization and its focus on ensuring a stable supply of petrol during a period of economic and regulatory transition.

### Conclusion

As it stands, the NNPC remains the sole buyer of petrol from the Dangote refinery, despite hopes from independent marketers for more direct access to the facility’s output. While this arrangement ensures control over the nation’s fuel supply, it also limits competition in the market. As the government continues to explore reforms in the petroleum sector, including the removal of subsidies and greater private sector involvement, the role of independent marketers in the distribution chain may evolve. For now, however, the NNPC’s exclusive purchasing rights underscore the government’s cautious approach to managing fuel supply and ensuring market stability.