The Nigerian National Petroleum Company Limited, NNPCL, has officially ended its exclusive purchase agreement with Dangote Refinery, allowing other marketers to buy petrol directly from the refinery.
This shift marks a significant step toward liberalizing the market and fostering competition. NNPCL will no longer be the sole off-taker of petrol from the 650,000-barrels-per-day Dangote Refinery, which began processing petrol earlier in September.
Specifically, independent marketers can now negotiate prices with the refinery, following the same practice as other fully deregulated products like diesel, aviation fuel, and kerosene.
The decision comes after pressure from the House of Representatives, which called for an end to the exclusivity arrangement, citing concerns over competition.
Lawmakers argued that the dominance of NNPCL and major marketers in the off-take of Dangote’s petrol could lead to monopolistic practices and price manipulation, urging for a more inclusive approach that benefits independent marketers and reduces costs for consumers.
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In response, NNPC acknowledged that maintaining its role as the sole off-taker was unsustainable. A top company official confirmed the development, stating, “We can no longer continue to bear that burden.”
Reports indicate that NNPCL was buying petrol at ₦898.78 per litre from Dangote Refinery and selling it to marketers at ₦765.99 per litre, bearing a subsidy of ₦133 per litre.
Its withdrawal from the arrangement opens the market, enabling marketers to purchase petrol at the prevailing market price. This could potentially lead to an increase in fuel prices as subsidies are removed, but it also promotes competition and could stabilize supply chains in the long term.
The move is expected to increase the refinery’s efficiency and performance, as well as give marketers the flexibility to source products from both Dangote and other suppliers. This development represents a major milestone in Nigeria’s ongoing efforts to deregulate its petroleum sector and end its dependence on fuel subsidies.
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