Nigerians will now be paying N1,030 per litre of Petrol in most states of the federation as the price has risen at various outlets of the Nigerian National Petroleum Company Limited (NNPC Ltd) in Abuja.
It will certainly be more than this in private filling stations, some of which depend on NNPCL for their supplies.
Major oil marketers are to begin the direct purchase of Premium Motor Spirit, popularly called petrol, from the Dangote Petroleum Refinery between Thursday and next week as the Nigerian National Petroleum Company Limited pulls out as sole off-taker of the product from the $20bn plant.
Sources from NNPC and the Major Energies Marketers Association of Nigeria confirmed on Tuesday that NNPCL was no longer the sole off-taker of Dangote petrol, giving room for other players in the downstream to buy products directly from the Dangote refinery.
This came as unconfirmed reports stated that the Nigerian Midstream and Downstream Petroleum Regulatory Authority had released new petrol prices, which are higher than the current pump prices in various locations nationwide.
The spokesman of NMDPRA, George Ene-Ita, did not confirm the development when contacted on Tuesday night. He also did not reply to the text message sent to him on the matter as of the time of filing this report.
Meanwhile, oil marketers said the decision of NNPC to stop being the sole off-taker of petrol from the Dangote refinery means that the Federal Government has systematically stopped subsidy on petrol completely.
On September 25, The PUNCH exclusively reported that the Federal Government might spend about N236bn monthly to subsidise petrol imported through NNPC and the one that was solely off-taken by NNPC from the Dangote Petroleum Refinery.
The report showed that NNPC was shouldering a subsidy of about N3.3bn daily on Dangote petrol, meaning in 30 days it might spend N99bn to subsidise Dangote petrol to marketers.
But by halting its position as the sole off-taker of Dangote petrol, the national oil company may save this sum.
Recall that the Federal Government had stated severally that only NNPC would off-take petrol from Dangote refinery after the company commenced the sale of PMS in September.
While stating that crude would be sold to Dangote in naira from October 1, the government, through the Federal Ministry of Finance in a recent statement, said, “In return, the Dangote refinery will supply PMS (petrol) and diesel of equivalent value to the domestic market to be paid in naira.
“Diesel will be sold in naira by the Dangote refinery to any interested off-taker. PMS will only be sold to NNPC. NNPC will then sell to various marketers for now. All associated regulatory costs (NPA, NIMASA, etc.) will also be paid in naira. We are also setting up a one-stop shop that will coordinate service provision from all regulatory agencies, security agencies, and other stakeholders to ensure a smooth implementation of this initiative.”
A very senior official with a major oil marketing firm confirmed on Tuesday that dealers had yet to start the direct purchase of petrol from Dangote refinery but stated that NNPC had ceased to be the sole off-taker of Dangote petrol.
“It is not true that major marketers have started lifting PMS from the Dangote refinery. Rather we were made to understand that the directive to start buying directly from them (Dangote refinery) was given today (Tuesday),” the official, who spoke on condition of anonymity because he was not authorised to speak on the matter, stated.
“It was in the news yesterday (Monday), but it was formally stated today (Tuesday) that marketers should not go through NNPCL again, rather we should go straight to buy from the refinery.
“However, as of today, Dangote has not come up with any price. The main thing is that it is now official that marketers can now approach the refinery and buy petrol. The truth is that NNPCL is not ready to buy the product again at a subsidised cost for marketers. That is the implication of what has happened, which means that petrol subsidy has been removed completely,” the major marketer stated.
He, however, noted that dealers had yet to review their prices.
“But nobody has reviewed the price yet, everyone is still selling at the prevailing price, both depots and filling stations. Maybe they want to exhaust their old stock first. This also means that any time from now Dangote refinery may release the price of its petrol to marketers.
“No marketer has started loading directly from the plant yet. It was like a rumour yesterday (Monday), that marketers were to start buying directly from the refinery, but I think it was formalised in the night before they came out today (Tuesday) to say that we can buy directly from the refinery.”
Another top official with MEMAN confirmed the change in the purchase of petrol from Dangote by operators in the downstream oil sector.
Asked whether major marketers had started buying petrol directly from Dangote refinery and at what cost, the MEMAN replied, “We were indeed buying through NNPC and just last two weeks we were picking the product by trucks from Dangote refinery through NNPC. We were paying about the same amount that we had been paying NNPCL for its products.
“This was the position during the last two weeks of September. We were also buying from them from their imported stock to store in our tank farms. Now we know that there’s something new that is coming as we read in the news. But I wouldn’t want to speak about it until we get the details. However, there is a change.”
The Managing Director of another major marketing company said dealers should start buying petrol directly from Dangote next week.
“I am not sure yet if some marketers have started loading directly from the plant. Maybe that will start next week because as of now, all that has happened is that we heard that NNPCL will no longer be the sole off-taker from the Dangote refinery.
“The last cargo we bought was through NNPCL. Maybe the next time we go, they will tell us that we have to go to the Dangote refinery directly. These things take a bit of time. People shouldn’t be in too much of a hurry. I am sure by next week things will be clearer.”
Similarly, a management staff of NNPCL confirmed that the national oil company had pulled out from being Dangote petrol’s sole off-taker.
“The burden is much. NNPC is no more going to be the sole off-taker of Dangote petrol. The prices of petrol are now going to be determined by market forces,” the source stated.
Price hike imminent
Meanwhile, the price of petrol is expected to increase to N1,029.01/litre in the Federal Capital Territory based on a new petrol price template reportedly released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
An online medium (not The PUNCH) stated that based on the template, NNPC was paying an average estimated differential of N134.5 per litre in the eight cities based on 10 trading days weighted averages from September 23 to October 4, 2024.
With the expected exit of NNPCL as the exclusive off-taker from the Dangote refinery, the NMDPRA data provides insights into possible pump prices.
In all the cities the document referred to, the average NAFEM FX rate used to calculate the pump price was N1,604.89/4.
In Lagos State, the indicative pump price is N991.21, while the actual NNPC pump price is N855. This indicates that NNPC pays about N136.21 as its estimated differential price.
In Abuja, the indicative pump price is N1,029.01 while the actual pump price is N897, meaning that the NNPC pays about N132.01 as an estimated differential.
For Kano, the indicative pump price is N1,040.31 per litre, while the actual pump price is N904, indicating an estimated differential price of N136.31.
In Calabar, the indicative pump price is N1,007.35; the actual pump price is N885 per litre, and the estimated differential price is N122.35.
In Sokoto, the indicative pump price is N1,045.72 per litre, while the actual pump price is N904, indicating an estimated differential of N141.72.
In Maiduguri, the indicative pump price is N1,059.39, while the actual pump price is N924, indicating an estimated differential of N135.39.
In Ibadan, the indicative pump price is N999.27 per litre while the actual pump price is N865, and the estimated differential price is N134.27.
Enugu’s indicative pump price is N1,022.63, the actual pump price is N885 per litre, and the estimated differential price is N137.63.
The NMDPRA, however, did not confirm the document, but dealers stated that the cost of petrol would rise once the subsidy on petrol stopped.
“Of course, petrol price is going to rise once the subsidy is completely removed by NNPC,” the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, Ukadike Chinedu, stated.
“Nigerians should brace for this reality. However, let’s hope that the sale of crude in naira is going to have some positive effect.”