The Dangote Petroleum Refinery and Petrochemicals Company has announced that it is selling Premium Motor Spirit (PMS) to domestic marketers at N960 per litre, which is below the N971 per litre benchmark set by the Nigerian National Petroleum Company Limited (NNPCL) following the removal of fuel subsidies.
The company said that its pricing is aligned with international market rates, ensuring competitiveness relative to imported products.
It challenged claims from various marketers, particularly the Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Petroleum Products Retail Outlets Association of Nigeria (PETROAN), that importing PMS is cheaper than purchasing from the refinery.
“Since the removal of the subsidy on PMS, NNPC established the pricing standard by offering PMS to domestic marketers at N971 per litre for shipments and N990 per litre for truck deliveries. We have further reduced our prices to N960 per litre for shipments while maintaining N990 per litre for trucks,” the company stated.
In its statement, Dangote Refinery expressed concerns over the potential importation of substandard fuel that could harm both public health and vehicles. “If anyone claims they can land PMS at a price lower than ours, they are likely importing substandard products and collaborating with international traders to introduce low-quality goods into the country, disregarding the health of Nigerians and the longevity of their vehicles. Regrettably, the regulator, NMDPRA, lacks the laboratory facilities needed to detect substandard products upon importation.”
The company also noted that an international trading firm has recently leased a depot facility adjacent to the Dangote Refinery, intending to blend substandard products for market competition against Dangote’s higher quality output.
“This situation poses a threat to the growth of domestic refining in Nigeria,” the statement added. “It is not uncommon for countries to protect their domestic industries to foster job creation and economic growth. For example, the US and Europe have imposed high tariffs on electric vehicles and microchips to safeguard their local industries.”
While Dangote Refinery remains committed to providing affordable and high-quality domestically refined petroleum products, it calls on the public to ignore misinformation propagated by those who favour job exportation and the importation of poverty.
During a recent meeting with stakeholders in the oil sector at the Presidential Villa, President Bola Ahmed Tinubu called for understanding among industry players. He pointed out that selling crude oil in Naira and supporting domestic refining efforts by Dangote will contribute to stability in the downstream sector.
The Governors of the 36 states also voiced their opposition to further importation of PMS by any marketer, arguing that it would undermine the newly established Dangote Refinery. In a communiqué released after their meeting, the governors noted the refinery’s potential for generating positive multiplier effects in the economy, particularly through job creation.
Additionally, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced that starting from October 2024, the FG anticipates generating around N700 billion monthly from gains associated with the sale of crude oil in Naira and the removal of subsidies.
Recent reports from August indicated that the landing cost of a litre of PMS was approximately N1,200, while NNPCL was selling petrol at around half that price. As the situation became unsustainable, NNPCL increased its prices to N855 per litre. NNPCL’s financial report for the fiscal year ending December 31, 2023, revealed that the Federal Government incurred significant costs of N5.1 trillion due to under-recovery and energy security expenses associated with fuel imports. To upset the cost, the FG approved the request of the NNPCL to use the 2023 dividends due to the federation to pay for petrol subsidy.
According to the National Bureau of Statistics (NBS), Nigeria spent N12 trillion on fuel imports in 2023, marking an 18.68 percent increase from N10 trillion in 2022. Struggling to sustain these costs, the FG announced a full deregulation of the sector, effectively ending all subsidies and under-recoveries, which resulted in a recent hike in petrol prices to align with market rates.
The $20 billion Petroleum Refinery, noted as the largest single private investment in Africa, is expected to secure foreign exchange revenue of around $20 billion annually at current market prices and save approximately $14 billion per year through domestic petroleum supplies. It is projected to create a minimum of 100,000 indirect jobs through retail outlets and significantly enhance the availability of petroleum products across Nigeria. Recent estimates suggest the refinery could boost Nigeria’s Gross Domestic Product to $322 billion by 2025.
In addition to its refining capabilities, the Dangote Refinery will have a positive impact on Nigeria’s industrial and manufacturing sectors. It aims to produce essential petrochemicals such as polypropylene, polyethylene, base oil, and linear alkylbenzenes, which will benefit various sectors, including agriculture
