The Nigerian National Petroleum Company Limited (NNPCL) has revealed that it purchased fuel from the Dangote Refinery at a price of N898 per liter, refuting earlier claims that the refinery sells at N760 per liter.
This disclosure, which came after NNPCL moved approximately 300 trucks to the 650,000-barrel-per-day Dangote Refinery in Lagos, initiating the first loading on Sunday, September 15, 2024, has stirred fresh concern over the cost of products from the refinery.
Chief Spokesperson of the NNPCL, Olufemi Soneye, confirmed the price while addressing concerns over the cost of petrol. Speaking to Daily Trust, Soneye clarified that, contrary to earlier reports, the initial price for the product was N898 per liter, not the N760 per liter that had been circulating.
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“We successfully loaded PMS at the Dangote Refinery today. The claim that we purchased it at N760 per liter is incorrect. For this initial loading, the price from the refinery was N898 per liter,” he stated.
However, this announcement sparked controversy, prompting Dangote Refinery to issue a rebuttal, dismissing NNPCL’s claims as misleading and deliberately aimed at downplaying the achievement of the refinery.
“Our attention has been drawn to a statement attributed to NNPCL spokesperson, Mr. Olufemi Soneye, that 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,” the Dangote Refinery’s statement, signed by Anthony Chiejina, the Group Chief Branding and Communications Officer of Dangote, read.
Chiejina explained that the refinery had yet to make any formal announcements regarding the pricing of PMS. He 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.
“It should also be noted that we sold the products to NNPCL in dollars with significant savings compared to what they are currently importing,” Dangote Refinery’s statement continued. “With this action, there will be petrol in every local government area of the country regardless of their remote nature.”
NNPCL Explains the N898 per Liter Price
The NNPCL provided a detailed explanation of how it arrived at the N898 per liter price. The state-owned company said the refinery’s quoted gantry price per ton was $736, which equates to $0.55 per liter. At the official exchange rate of N1,637.59 per dollar, this amounts to N898.78 per liter in naira terms. NNPCL also 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.
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.
For example, in Rivers State, the pump price is expected to reach N980.22, while in the Federal Capital Territory (Abuja), prices could climb as high as N992.22 per liter. The highest prices are projected in Nigeria’s North-West and North-East regions, where the product could sell for N999.22 and N1,019 per liter, respectively.
These prices represent a sharp increase from NNPCL’s earlier rates of N580 to N620 per liter, which were based on imported petrol.
The NNPCL is the sole off-taker of PMS from the refinery and is expected to distribute the product to other marketers across the country. However, given the current pricing structure, marketers are likely to face higher costs, with estimates suggesting that prices in some places outside Lagos will exceed N1,200 per liter.
Hope for Cheaper Fuel Dashed?
The first deliveries from the Dangote Refinery mark the transition to locally refined products, but the price hikes have raised concerns about affordability, especially in light of the already challenging economic conditions.
Against this backdrop, the news of the N898 per liter price tag has not been well received by many stakeholders. The Independent Petroleum Marketers Association of Nigeria (IPMAN) expressed frustration, questioning the logic behind pricing locally refined petrol higher than imported products.
John Kekeocha, IPMAN’s National Welfare Officer, speaking on Channels Television’s The Morning Brief, voiced his concerns: “If NNPC can sell Dangote products higher than the imported products, then it doesn’t make sense. What is the celebration we are having all these while then?”
However, in response to the growing concerns, industry analysts have explained that the higher price stems from the Dangote Refinery’s use of dollars to purchase crude oil before the formal transition to naira-based transactions, which will commence in October 2024. According to these experts, while Nigerians had high hopes for cheaper petrol from the Dangote Refinery, the reality is that current crude procurement costs will determine the selling prices.
“NNPC cannot blame Dangote for the increase in PMS prices. The moment for Dangote Refinery is today, Nigeria’s decade for backward integration through import substitution for refined crude oil. NNPC was landing dirty fuels at 70 cents per liter, and Dangote is selling PMS today at 55 cents per liter—he is bending over backwards to save Nigeria at the nick of time,” Kelvin Emmanuel, an energy analyst, said.
While the refinery has assured Nigerians that from October 1, 2024, petrol sales will be priced in naira, the short-term economic pain of higher fuel prices has left many questioning whether the much-anticipated production from the 650,000bpd oil plant will provide the much-anticipated relief.