Access to Products And Pricing: Dangote Refinery Still Mired in Controversy Days After The Commencement of Fuel Supply

The excitement surrounding the launch of the Dangote Petroleum Refinery in Lagos is quickly giving way to a more complicated reality as days go by.

While the refinery’s operations marked a significant step in Nigeria’s efforts to refine petroleum locally, issues have arisen, particularly regarding access to products and pricing, casting shadows over the initial optimism.

For days now, petroleum marketers, represented by the Independent Petroleum Marketers Association of Nigeria (IPMAN), said they have been completely left out of. Despite NNPC Limited lifting petrol from the Dangote Refinery last Sunday, marketers still struggle to access the product, according to a report by BusinessDay.

Abubakar Maigandi, IPMAN’s president, was candid about the situation, explaining that the marketers are still relying on old stocks of petrol as they await clarity on pricing from NNPC Limited. According to him, the price uncertainty has left marketers at a standstill.

“We have not been supplied petrol from Dangote Refinery as we wait for the NNPC on pricing,” he said.

“We are still selling old stocks of petrol. There is still so much uncertainty about pricing or when we will lift Dangote petrol,” the IPMAN President stated.

However, Dangote Refinery told Vanguard it has been making strides in delivery. As of this week, the refinery reported that it had delivered 111 million liters of petrol in just three days, far surpassing NNPC’s earlier assertion that the refinery could only supply 16.8 million liters.

A spokesperson from Dangote confirmed that loading operations were ongoing and that they would continue supplying the market.

“We are refining and have no reason not to load. So, loading is ongoing and we would continue to provide the product to the market,” The Group Chief Branding and Communications Officer of Dangote Refinery, Anthony Chiejina, stated.

Contrary to this assertion, a source within NNPC suggested that Dangote’s operations were struggling to meet initial promises, thus casting doubt over the refinery’s capacity to end Nigeria’s dependency on fuel imports anytime soon.

This uncertainty isn’t just a bump in the road—it underscores deeper complications that have dogged the nation’s petroleum sector for years.

The Pricing Controversy and A Deepening Rift

The heart of the matter lies in the price dispute that erupted between NNPC Limited and Dangote Refinery shortly after the refinery began operations. Last Monday, September 16, NNPC released its pricing details for petrol from Dangote Refinery, stating that it was purchasing the product at an eye-watering price of N898 per liter. This announcement sent shockwaves across the industry, as this figure seemed exorbitantly high for locally refined petroleum, sparking controversy and criticisms even among stakeholders.

Dangote Refinery, however, pushed back almost immediately, refuting NNPC’s claim. According to the refinery’s management, the crude oil processed was not yet part of the naira-dollar transaction arrangement that was meant to take effect in October. They argued that the current pricing should reflect the global market in which crude is still purchased in dollars, not naira. However, the refinery did not say how much it was selling to the NNPCL.

An Industry Still in Flux

The ramifications of this pricing dispute are significant. Across Nigeria, petrol prices have soared, with some locations reporting prices as high as N1,000 per liter, while others hover around N1,200. This disparity has left many wondering when, or if, the full benefits of local refining will be felt by everyday Nigerians.

The price debate which has escalated over the week has prompted the question: if the refinery is supposed to reduce Nigeria’s dependence on imports and stabilize prices, why are local consumers still grappling with such high costs?

The roots of the current price controversy stretch far beyond this single transaction between NNPC and Dangote Refinery. For years, Nigeria’s petroleum sector has been hamstrung by a tangled web of policy, subsidy programs, and mismanagement. NNPC, historically, has maintained a near-monopoly on fuel imports and distribution, a control mechanism that has left it at the center of nearly all pricing disputes.

At the heart of the price dispute is the cost of the crude oil purchase made earlier by Dangote Refinery. The refinery has explained that the feedstock was purchased in dollars and thus, must be sold accordingly. This means the naira-based deal made between the Nigerian government and Dangote Refinery will only take effect following the exhaustion of the current feedstock. The refinery said that it will begin in October.

Against this backdrop, many believe that NNPC is used to setting prices unilaterally, thus, reaching a consensus with Dangote on pricing will birth friction.

As Nigeria moved to deregulate its downstream petroleum sector, expectations were high that private sector players like Dangote Refinery would usher in a new era of price stability and transparency. But as seen in this case, the complexities of pricing, supply agreements, and government policies mean that even with the country’s largest refinery now operational, old issues of distrust and inefficiency still plague the system.