PMS: Why petrol marketers can’t buy direct from Dangote Refinery

By Nnamdi Ekene

Last Sunday, September 15, 20024 the Nigerian National Petroleum Company Limited (NNPCL) commenced the first loading of Premium Motor Spirit from the 650,000-barrel-per-day Dangote Refinery in Lagos and announced a list of retail prices of Dangote Petrol across its outlets nationwide.

It also revealed that it purchased the fuel from the Dangote Refinery at a price of N898 per litre. The disclosure of the price at which the NNPCL bought the fuel immediately ignited a negative reaction from Dangote refinery, which described NNPCL’s claims as misleading and mischievous.

The Group Chief Branding and Communications Officer of Dangote, Mr Anthony Chiejina, in a statement said; “Our attention has been drawn to a statement attributed to NNPCL spokesperson, Mr. Olufemi Soneye, we sell our PMS at N898 per litre to the NNPCL. This statement is both misleading and mischievous, deliberately aimed at undermining the milestone achievement recorded today, September 15, 2024, towards addressing energy insufficiency and insecurity, which has bedeviled the economy for the past 50 years”. Chiejina explained that the refinery sold the products to NNPCL in dollars and had yet to make any formal announcements regarding the pricing of PMS. He therefore called on Nigerians to disregard the NNPCL’s pricing claims, noting that the pricing committee appointed by President Bola Tinubu would make an official announcement on October 1, 2024, once naira-based crude sales to local refineries commence.

While disputing the price claims of the NNPCL, Dangote refinery, however, failed to disclose the actual amount it sold its fuel to the NNPCL. Curious Nigerians have, therefore, been wondering why it is difficult for Dangote refinery to tell Nigerians how much it is selling its product to NNPCL. Some analysts are even suggesting that they are already seeing the same monopoly trend that Dangote has always been accused of but which he has always denied.

Responding to Dangote refinery’s rebuttal, the NNPCL went ahead to provide a detailed explanation of how it arrived at the N898 per litre price. The state-owned oil company said the refinery’s quoted gantry price per ton was $736, which equates to $0.55 per litre. At the official exchange rate of N1,637.59 per dollar, this amounts to N898.78 per litre in naira terms. NNPCL further noted that statutory charges, such as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) fee, inspection fees, distribution costs, and a profit margin, would be added to the landing cost of PMS to determine the pump price. The charges include the NMDPRA fee, N8.99; inspection fee, N0.97; distribution cost (Lagos) N15.00; and profit margin, N26.48. According to it, once these additional charges are factored in, the cost per liter of petrol in Lagos is projected to be N950.22, while prices in other parts of the country will vary due to transportation and distribution costs.

The Petroleum marketers in Nigeria were therefore confused over the controversy surrounding the pricing of Dangote Refinery Premium Motor Spirit as released by the NNPCL. They demanded that Dangote Refinery should disclose the price it sold petrol to NNPCL for transparency.

However, the oil marketers can’t import petrol or buy directly from Dangote Refinery because it is not profitable and cost-effective for them to do so. Executive Vice President, downstream at NNPC, Mr Adedapo Segun while speaking with newsmen said no one has precluded any marketer from importing petrol but that they are unwilling to import because the market is not right for them. He said, “the marketers get approval from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to bring in automotive gas oil (AGO), aviation turbine kerosene (ATK), and petroleum motor spirit (PMS). They then go to the market, check the market indices, and discover that PMS is still being sold below cost, If they bring it in, they will run at a loss. So, they end up bringing only AGO and ATK. They do not bring in PMS because the market is still not right for them. So, it is not because NNPC wants to be the sole importer or provider of PMS. It is because the other marketers won’t do it if it’s not profitable.” he said.

The NNPC executive also explained that marketers can not purchase petrol directly from Dangote refinery because the product is still being sold at a subsidised rate. “It is the same thing happening with Dangote refinery petroleum. Dangote is a company and it is going to sell at market price. The market value of PMS is still higher than what the NNPC is selling. So, there is no way the marketers would buy from Dangote. NNPC off-taking is only because the others would not buy at the price Dangote will be willing to sell, which is reasonable. As soon as the price allows for it, you will see the marketers go to Dangote and buy. So, instead of saying NNPC is the only off-taker, let’s put it this way: NNPC is the only entity that is willing to off-take because NNPC has a role under law to be the energy provider of the resort”, he said

•Ekene sent this piece from Enugu

culled from The Nation Online.