…as NNPC declines to be sole buyer of products
As published yest4erday (Monday)by The National Press Newspaper that Profits Margin bane of Petroleum Product scarcity in Nigeria.
The Nigeria National Petroleum Corporation Limited, NNPC Ltd. has threatening never to patronize Dangote refinery unless Dangote is selling its products cheaper.
Investigation by The National Press Newspaper revealed that, the cost of production and cost of purchasing crude by Dangote is higher. As a businessman, profits margin made the price of petroleum products from Dangote refinery to be higher than what The Nigeria National Petroleum Corporation, NNPC Ltd can afford.
With th analysis above, Dangote refinery may resort to exporting its Premium Motor Spirit (petrol) following the refusal of the Nigerian National Petroleum Company Limited to be the sole buyer of its product.
The NNPC, in a statement by its spokesman, Olufemi Soneye, said on Saturday that it would not buy Dangote fuel unless it was cheaper than that of the international market.
This is contrary to claims by the President of the Dangote Group, Aliko Dangote, that the refinery was waiting for the NNPC to roll out its product.
On Saturday, the NNPC stated that it would only fully offtake petrol from the refinery if the market prices of PMS were higher than the pump prices in Nigeria.
The NNPC also declared that Dangote and other domestic refineries were free to sell directly to any marketer on a willing buyer, willing seller basis, adding that it had no desire or intention to become the distributor for any entity in a free market environment.
The company was reacting to a press release by the Muslim Rights Concern, which claimed that the Dangote refinery was being undermined by the NNPC.
MURIC stated that recent changes to the pump price of petrol by the NNPC would prevent the refinery from offering lower prices, and that the corporation had become the sole offtaker of all products from the refinery.
Responding, the NNPC said, “The pricing of petroleum products from any refinery, including Dangote Refinery Limited, is determined by global market forces.
“The recent changes in PMS prices have no impact on DRL or any other domestic refinery’s access to the Nigerian market. In fact, if current prices are perceived as high, it presents an ideal opportunity for the refinery to sell its products at lower prices in the Nigerian market.
“Furthermore, we emphasise that there is no guarantee of lower prices associated with domestic refining compared to any global parity pricing framework, as confirmed by the DRL. The NNPC Ltd will only fully offtake PMS from the DRL if the market prices of PMS are higher than the pump prices in Nigeria. The DRL and any other domestic refinery are free to sell directly to any marketer on a willing buyer, willing seller basis, which is the current practice for all fully deregulated products. NNPC Ltd has no desire or intention to become the distributor for any entity in a free market environment, and therefore, the notion of becoming a sole off-taker does not arise.”
Soneye added that the NNPC could not undermine a business in which it held a billion-dollar investment.
Dangote’s wait
While unveiling the 650,000-capacity refinery last Tuesday, Dangote had stated that the facility would roll out petrol whenever the NNPC was ready.
Dangote disclosed that petrol would get to the filling stations in the next 48 hours (from Tuesday) after all arrangements with the NNPC were concluded, adding that the queues would soon be over.
“Our PMS can be in filling stations within the next 48 hours, depending on NNPCL,” he said.
He spoke further, “We are ready. I pray that within the next few days, you won’t see any petroleum queues as soon as we finalise with NNPC. We are ready, we are waiting for them (NNPC) and I hope they will be ready like yesterday.”
Dangote told newsmen that he could not disclose the price of the petrol because the NNPC was in a position to control it.
“On the pricing, I can’t say anything because we don’t control the pricing. At the moment, it is controlled by NNPC, not Dangote. We will wait for them. But, our own for now is to make sure that the product is available and round-tripping is stopped,” he noted.
The businessman emphasised that the NNPC was the company that would sell and distribute the product under the current naira crude sale arrangement.
“Once the NNPC is ready, we roll. We are even ready to load a ship this week,” he added.
Product export
But it seems the talk between the two companies have collapsed, which may result in the company selling its petrol abroad.
The NNPC has issued several statements denying that it will fix the price for Dangote or be its sole off-taker, even as the refinery has yet to roll out its product.
Nigerians have wondered why the NNPC decided to hike the pump price of petrol the same day Dangote refinery unveiled its petrol, after several months of implicit subsidy payment.
The masses, who were hopeful that the Dangote fuel would crash the price of petrol, may be losing hope.
Speaking on the Brekete Family live show on Monday, the Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, said Dangote petrol would be exported if the NNPC and other petroleum dealers in the country refused to patronise it.
Asked if the petrol would be sold locally, Edwin replied, “There has been a kind of a blockade from lifting our products within the country. The traders have been trying to blockade, and so now, we have been exporting our petroleum products. We are ready to pump in PMS as much as possible to the country.
“But if the traders or NNPC are not buying the product, obviously we will end up exporting the PMS as we are doing with the aviation jet and diesel,” he declared.
Edwin expressed surprise that the company started facing challenges it never expected when the refinery was set to commence operations.
He recalled that the philosophy initially was to add value to the raw materials available in the country, regretting that Nigeria was still exporting crude and importing refined petroleum products after over three decades.
Despite having a gantry that can load 2,900 tankers per day, Edwin disclosed that the refinery had not loaded up to five per cent of the gantry’s capacity owing to low local patronage.
A professor of Economics at the University of Ibadan and President of the Nigerian Economics Society, Adeola Adenikinju, advised that the government and the NNPC should buy PMS from the Dangote refinery instead of importing from another country.
“Dangote refinery is a private business; he will export to where he can make money. He cannot be subsidising our economy. It is still going to be cheaper for the NNPC to buy from Dangote than to import from Europe. Dangote has to run the business and pay his debts, he can’t subsidise us,” Adenikinju noted.
The Independent Petroleum Marketers Association of Nigeria on Saturday said it would buy PMS from Dangote at any price, even if the NNPC refused to buy.
The National President of the association, Abubakar Maigandi, told our correspondent that the independent marketers were ready to patronise Dangote.
“Whatever the case, if Dangote starts selling his product, we are going to patronise him; if at all he wants to do business with us.
“We are ready to buy at any price because the NNPC is saying that they don’t want to involve themselves in fixing prices. So, at any price that he wants to sell, we are ready to buy and discharge and sell at a good price,” Maigandi stated.
Members of IPMAN own about 80 per cent of the filling stations in Nigeria, especially in rural communities.
On Thursday, the NNPC also said it was waiting for a September 15 timeline given to it by the refinery.
However, the latest comments from the NNPC indicate all is not well with the negotiations between the two companies.
The spokesman for the Dangote Group, Anthony Chiejina, did not answer calls or reply messages sent to him by our correspondent on Saturday.
