NNPC Ready To Patronized Dangote if his price is reasonable – NNPC
Current fuel scarcity being experience in Nigeria was caused by profits margins from Petroleum products importers.
Investigations by The National Press Newswpaper indicates that products importers that suppose to assist NNPC Ltd in importation of petroleum products refuses to imports because there is no profits in the business.
By vertues of Petroleum Industry Act, PIA, the law that guides operations in the Nigeria’s oil and gas sector, empowers NNPC Ltd to come in as saver incase all products importers refuses to import.
Business products importers that suppose to import now left it to NNPC Ltd alone, who imports and sold the public without interest, rather on a loss.
Hope of Nigerians of getting cheaper and affordable Premium Motor Spriti, PMS, popularly called ‘petrol’ may not come to fruits. Investigations by The National Press Newspaper indicates that, technically, the only known private refinery working today in Nigeria is Dangote Refinery.
The Nigerian Naional Petroleum Corporation Limited, NNPC Ltd., and its subsidiary, Department of Petroleum Resource, DPR, who is the oil and gas police and law enforcement agencies, are selling crude oil to Dangote refinery in dollar equivalent price in Nigeria currency. Therefore, Dangote is getting crude from NNPC Ltd like importing the crude.
Putting prices of processing the crude and getting the crude, Dangote refinery might be force to sell Premium Motor Spirit, PMS, above NNPC Ltd. current price. As a businessman, the first thinking will be making profits.
No right thinking businessman will invest his money without interests. The percentage of interest might differs. Profits margins in the downstream sector of the Nigeria Oil and Gas however prevented private sectors participation in the importation of Premium Motor Spirit popularly called ‘Petrol’ thereby leaving the importation alone (importation of PMS) into the hands of the Nigerian National Petroleum Corporation, NNPC Ltd. to become sole importer. It is only government through NNPC Ltd that can sacrifice profits margin and puts the interest of the citizens at heart.
Speaking with Executive Vice President of Downstream, NNPC Ltd., Mr. Adedapo Segun said: “The pump price today is not market reflective. NNPCL is the sole importer of PMS in the country, which is abnormal. We should be moving towards a situation where the free market determines prices,” he said, stressing that market forces, rather than any single entity, should dictate fuel prices.
Petrol Prices are Determined by Free Market Forces-NNPC
The Nigerian National Petroleum Company Limited (NNPC Ltd) has stated that foreign exchange (forex) illiquidity has been a significant factor influencing the fluctuation in prices of Premium Motor Spirit (PMS), which are governed by unrestricted free market forces, as provided for in the Petroleum Industry Act (PIA).
Speaking on TVC News’ “Journalists’ Hangout” show recently,the Executive Vice President of Downstream, NNPC Ltd, Mr. Adedapo Segun explained that the current fuel scarcity was expected to “subside in a few days as more stations recalibrate and begin selling PMS.”
He said Section 205 of the PIA, which established NNPC Ltd, stipulated that petroleum prices were determined by unrestricted free market forces.
According to him, “The market has been deregulated, meaning that petrol prices are now determined by market forces rather than by the government or NNPC Ltd. Additionally, the exchange rate plays a significant role in influencing these prices.”
“The pump price today is not market reflective. NNPCL is the sole importer of PMS in the country, which is abnormal. We should be moving towards a situation where the free market determines prices,” he said, stressing that market forces, rather than any single entity, should dictate fuel prices.
Segun clarified that NNPCL’s role as the sole importer of Premium Motor Spirit (petrol) was not a deliberate choice by the company but a response to market conditions.
“Let me put it in the proper context. NNPCL is not a regulator. We didn’t choose to be the sole importer. We don’t determine who plays in the market. We stepped in when others reduced their participation. It’s not about wanting to be monopolists,” he explained.
He also stated that achieving a stable fuel supply and price would require ideal market conditions, including a more liquid foreign exchange market.
“Market conditions need to be perfect, and there must be FX liquidity,” he added, suggesting that broader economic reforms may be necessary to address the fuel pricing issue.
NNPCL has been working closely with private refineries, such as Dangote, to ensure a steady supply of crude oil for refining.
“We have supplied about 30 million barrels to Dangote so far: 6.3 million this month, and we will supply 11.3 million in October,” Segun revealed.
In reaction to why NNPC Ltd has not started lifting refined petroleum from Dangote refinery, Dangote refinery in a statement released in Lagos said: “We would like to state that NNPC has not commenced lifting of refined Premium Motor Spirit, PMS, commonly known as ‘petrol’, from our Dangote Petroleum Refinery.Therefore, the issue of fixing the price of petrol lifted from our refinery does not arise, as we are yet to finalize our contract with NNPC,” the statement read in part.”
The company further emphasised that “the PMS market is strictly regulated, which is known to all oil marketers and stakeholders in the sector,” and therefore, “we cannot determine, fix, or influence the product price, which falls under the purview of relevant government authorities.”
