NNPC Limited and Dangote Refinery: Price Negotiations and Impact on Nigeria’s Petroleum Industry

In the ever-evolving landscape of Nigeria’s petroleum industry, recent developments have seen the Nigerian National Petroleum Company (NNPC) Limited and the Dangote Refinery engaging in crucial discussions to address petrol pricing, distribution, and margins for stakeholders in the value chain.

As the Dangote Refinery prepares to commence production and distribution of refined petroleum products in May 2024, the discussions aim to ensure a smooth and effective supply chain that benefits the Nigerian economy.

Independent marketers have proposed a lifting price of N550 per litre to the management of Dangote Refinery, which is currently in the process of finalizing the pricing and distribution plans.

The final price will vary based on the distance of delivery and the associated costs.

This move is expected to provide cheaper petrol prices to Nigerians, as the locally refined product will eliminate the need for costly transportation from global markets.

Experts, including Professor Wumi Iledare, have expressed optimism that the Dangote Refinery’s operation at full capacity could lead to lower petrol prices in Nigeria.

The reduction in acquisition costs of crude oil and the elimination of transportation costs are expected to contribute to this price decrease.

The Crude Oil Refinery-owners Association of Nigeria (CORAN) has highlighted the importance of government support for other indigenous refinery projects to reduce dependence on imported petrol and create more job opportunities.

They have proposed the creation of a $1 billion fund to support local investors in completing new refineries, which would address the challenges of financing and further strengthen the Nigerian oil and gas industry.

As the NNPC Limited moves to end petrol scarcity in Lagos and its environs, it has assured the public that the recent tightness in Premium Motor Spirit (PMS) supply was a result of an issue in one depot, which has since been resolved.

The company has urged motorists to avoid panic buying and has promised to maintain the sufficiency of petroleum products in the affected areas.

The coming on stream of the Dangote Refinery is a significant milestone for Nigeria’s petroleum industry, as it is expected to reduce the country’s dependence on imported petrol, conserve foreign exchange, and create additional job opportunities.

The discussions between the NNPC Limited and the Dangote Refinery, as well as the support for other indigenous refinery projects, are crucial steps towards achieving a more sustainable and self-sufficient petroleum industry in Nigeria.