The Nigerian National Petroleum Company Limited (NNPC) may not be able to lift petrol from the Dangote Refinery by September 15th as planned, due to a lack of commercial agreement on the product’s price.
On 5 September 2024, Adedapo Segun, NNPC’s Executive Vice President of Downstream, announced during a live television programme that the company would begin lifting Dangote petrol on 15 September.
Although negotiations are ongoing, multiple sources from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) have said there is no commercial agreement on pricing, petrol lifting, and other things for the September 15 kick-off date.
“For product lifting in 48 hours, there ought to be some documentation between NNPC and NMDPRA as we speak but we don’t have that yet,” a source said.
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He added, “Nothing concrete has been agreed on right now in terms of petrol lifting, but I believe the process is still ongoing”.
Olufemi Soneye, spokesperson of NNPC said he is currently negotiating with Dangote Refinery over petrol pricing.
“We are currently negotiating prices with the Dangote Refinery. We were informed that it would be available by September 15, so we are waiting for that,” he said to the media.
Devakumar Edwin, vice president of oil and gas at Dangote Industries Limited declared on Thursday during a space session organised by Nairametrics on X noted that discussions were advancing on naira transactions for crude purchase and product buy-back.
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“We are still discussing with the government to give us the crude in naira. The discussions have been going on. It has not yet been concluded. When we buy the crude from them in naira, they will take the products back from us in naira, that’s where we are. We are still in discussions.
Edwin revealed that Aliko Dangote, the president of Dangote, reluctantly agreed to sell petrol to the Nigerian government in naira due to the country’s severe foreign exchange shortage.
“Despite the potential financial loss, Dangote felt compelled to support Nigeria during this difficult time,” Edwin said.
“When it came to petrol, we told the Presidency that if we were going to continue to import crude, our cost of production would be high and of course, our quality is very high. So, we will continue to export and manage the business.
“Then they sat with us and said, ‘Okay, we will try and give you crude allocation and you please produce and sell to us the products which you are producing out of the crude’. We said, yes.
“Then they said, can you sell it in naira? We said, no, we are a free zone company. We will normally be selling in dollars. They said, no, the country is in acute scarcity of dollars. So, please, we will supply the crude to you in naira.
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“Sell the product to us in naira. Though internally, including me, some of us objected to the idea. My president clearly said we are going to accept this because the country is badly in need of foreign exchange,” Edwin said.
Edwin said that the refinery can produce up to 54 million litres of refined petroleum products per day, depending on the crude oil supply.
However, local crude supplies have been inconsistent, forcing the refinery to rely on imported crude from countries like the United States and Brazil.
This situation has been exacerbated by international oil companies (IOCs) prioritising foreign markets, often selling crude oil at prices significantly above the market rate for local buyers
He added that the refinery’s production capacity is more than sufficient to meet Nigeria’s petroleum needs. He stated that 44 percent of the refinery’s output is enough to cover 100 percent of the country’s demand for refined products.
