Dangote Refinery’s Petrol to Hit Nigerian Market Exclusively Through NNPC Starting September 15th

Nigeria’s state-owned oil company, NNPC Limited, will begin distributing gasoline from the 650,000 barrels-per-day Dangote Refinery to the local market this Sunday, following the resolution of key disputes over offtake rights and pricing. This comes after the $20 billion refinery, constructed by Africa’s richest man, Aliko Dangote, began processing gasoline last week. Initially, distribution had been delayed due to issues concerning the terms of sale and who would hold the exclusive rights to distribute the product.

Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service (FIRS), confirmed the completion of agreements, announcing that loading of the first batch of Premium Motor Spirit (PMS) from the Dangote Refinery will commence on Sunday, September 15. Additionally, from October 1, NNPC will start supplying 385,000 barrels of crude oil per day to the refinery, with payment for the crude settled in Nigeria’s local naira currency. Adedeji also emphasised that the refinery will only sell gasoline to NNPC, making the national oil firm the exclusive buyer and distributor of Dangote’s petrol, while marketers interested in purchasing the product will need to do so through NNPC.

This development signals a significant change in Nigeria’s fuel supply and distribution landscape. While NNPC’s role as the exclusive distributor of Dangote Refinery’s petrol has now been formalized, the refinery will have more flexibility with other products, such as diesel. Unlike gasoline, which is now under NNPC’s purview, the refinery is permitted to sell diesel to any buyer, including local traders. Adedeji noted that in exchange for crude oil, Dangote will supply equivalent quantities of gasoline and diesel to the domestic market, again to be settled in naira.

This arrangement contrasts NNPC’s earlier statement, which indicated that it did not plan to be the sole distributor of petrol from the Dangote Refinery. According to Devakumar Edwin, Vice President of Dangote Industries Limited, only about 5% of local fuel traders have been purchasing from the refinery, which is currently limiting its diesel sales to just 29 tankers per day. However, with NNPC taking over petrol distribution, the broader market may see more consistent availability of the refinery’s output, potentially alleviating some of Nigeria’s fuel supply challenges.