Starting between this Thursday and next week, major oil marketers will begin buying Premium Motor Spirit (PMS), commonly referred to as gasoline, directly from the Dangote Petroleum Refinery. This development marks a significant change as the Nigerian National Petroleum Company Limited (NNPCL) is no longer the sole purchaser of gasoline from the $20 billion facility.
On Tuesday, NNPCL and the Major Oil Marketers Association of Nigeria (MEMAN) confirmed that other downstream companies could now buy fuel directly from Dangote’s refinery. This change follows growing speculation that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) might have introduced new fuel prices, which could be higher than those currently charged at fuel stations across Nigeria.
When contacted, NMDPRA spokesperson George Ene-Ita did not confirm the news, and he had not responded to inquiries as of the time of this report.
Full Removal of Fuel Subsidies and Implications for Gasoline Prices
Oil marketers believe this move signals the complete removal of fuel subsidies by the Federal Government. The decision by NNPCL to step back as the sole buyer of gasoline from Dangote’s refinery further proves this point. In a previous report on September 25, 9am News Nigeria revealed that the government might pay as much as N236 billion monthly in subsidies for both imported fuel and gasoline obtained exclusively from Dangote’s facility.
However, with NNPCL stepping down as the exclusive buyer, the national oil company could save billions. Previously, NNPCL had been subsidizing Dangote gasoline at a rate of N3.3 billion daily, potentially costing the corporation N99 billion in subsidies over 30 days.
Initially, the Federal Government had stated that only NNPCL would purchase gasoline from Dangote’s refinery. In a statement on October 1 from the Ministry of Finance, it was confirmed that crude oil would be sold to Dangote in naira, with the refinery supplying equivalent volumes of PMS and diesel to the domestic market. Diesel would be sold to any interested buyer, while NNPCL was expected to continue as the exclusive buyer of PMS—until this recent shift.
Currently, no new price has been released by the Dangote refinery. However, a major oil marketer explained that marketers are now allowed to approach the refinery directly to buy gasoline, signaling the complete removal of gasoline subsidies. Despite this, no marketers have revised their pump prices yet, possibly waiting to sell off existing stock before making adjustments.
Gasoline Prices Set to Rise
Although prices remain unchanged for the moment, industry experts expect an increase once Dangote releases its official rates for gasoline. Another official from MEMAN confirmed that while marketers have been buying gasoline through NNPCL, they will likely begin purchasing directly from the Dangote refinery by next week.
As of Tuesday, no major marketer had started buying gasoline directly from Dangote, but this is expected to change shortly. It is anticipated that by next week, NNPCL will no longer be involved in the gasoline supply chain, with prices likely being determined by market forces.
Imminent Petrol Price Increase
According to reports, the price of petrol could rise significantly to N1,029.01 per litre in the Federal Capital Territory (FCT). A new price template, reportedly released by the NMDPRA, suggests that NNPCL had been covering price differentials of N132.01 per litre in Abuja. However, with NNPCL no longer the sole purchaser, pump prices may soon reflect actual market rates.
The template also provides insight into potential price hikes across various cities. For instance, in Lagos, the estimated pump price could rise to N991.21 per litre, while in Kano, the price might hit N1,040.31 per litre.
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