The Nigerian National Petroleum Company Limited (NNPC) has instructed oil marketers to halt the importation of petrol, citing the Dangote Refinery’s sufficient capacity to meet domestic demand.
This directive followed a high-level meeting in Abuja involving NNPC Group CEO Mele Kyari, representatives from the Major Oil Marketers Association of Nigeria (MOMAN), the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), and other key stakeholders, including companies like 11 Plc, Matrix, AA Rano, and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
Sources familiar with the discussions revealed that NNPC delivered a firm message, informing stakeholders that future petrol supply would now be contingent on clearance from the Dangote Refinery. “NNPC emphasised that going forward, no marketer would be permitted to import petrol without specific clearance tied to Dangote’s capacity,” said an official in attendance.
While the directive is viewed as a strategic move to enhance local refining capabilities, it has sparked concerns within the oil marketing community.
Marketers expressed doubts over Dangote Refinery’s ability to reliably meet market demands and sustain consistent distribution throughout Nigeria’s vast network.
Despite the refinery’s reported capacity, questions have been raised regarding its ability to handle Nigeria’s fluctuating petrol demand.
Additionally, a new payment structure proposed by Dangote Refinery has caused further unease.
Unlike the conventional importation system, where marketers pay after delivery at depots, Dangote insists on advance payments.
This policy change has raised concerns about cash flow, particularly for smaller players in the downstream sector.”Paying upfront significantly increases financial pressure on marketers, particularly those with limited capital.
For decades, we’ve operated on a post-delivery payment model, which aligns better with our liquidity cycles,” one stakeholder noted.Since commencing operations in January,
Dangote Refinery has focused on selling its diesel, jet fuel, and other products to global markets, mainly through traders like Vitol, Trafigura, and BP, according to S&P Global Commodities at Sea data.
Although initially agreeing to an exclusive supply agreement with NNPC for gasoline, Dangote Refinery began supplying local marketers as of November 4.
Dangote has emphasized that its gasoline meets high-quality standards, with a sulfur content of less than 10 parts per million (ppm), a notable improvement for the Nigerian market, where the standard was still 500 ppm as of late 2023. “There is a price differential between Dangote’s premium petrol of 10ppm and imported petrol of 50ppm,” a source mentioned.
On Oct. 29, refinery CEO Aliko Dangote complained that the refinery was wasting money holding over 500 million liters (around 3.1 million barrels) of fuel in storage, while the company has blamed illicit low-quality imports for undercutting its prices and threatened to sue state oil company NNPC for continuing its fuel imports
