Indications suggest that the Federal Government’s committee, established to ensure the implementation of crude oil sales to local refineries in naira, will further discuss the pricing of Premium Motor Spirit (petrol) from the Dangote Petroleum Refinery next month. Multiple officials, including oil marketers and members of the Implementation Committee on crude oil sales in naira, confirmed that the panel would hold a series of meetings to conclude a framework for benchmarking the amount Dangote Refinery would pay for crude in naira.
The committee will also decide whether the Federal Government should pay subsidies for petrol from the plant or allow Nigerians to buy the product at the market price. However, oil marketers warn that the cost of Dangote petrol would be higher than current pump prices, making it challenging for dealers to purchase the commodity without government intervention.
The Nigerian National Petroleum Company Limited (NNPC) is the sole importer of petrol, and other marketers stopped importing due to difficulties accessing US dollars. NNPC’s Chief Financial Officer, Umar Ajiya, revealed that the company had been shouldering a heavy subsidy burden on petrol imports, with a shortfall of around N7.8 trillion in the first seven months of this year.
The Federal Government’s committee has reached an agreement with Dangote Petroleum Refinery for the rollout of petrol in September, with the sale of crude oil to Dangote Refinery and other local refineries commencing on October 1, 2024. The government will discuss the cost of petrol from the $20 billion plant with Dangote management in the coming weeks, with options to either pay subsidies or allow Nigerians to buy at the market price.
Oil marketers emphasize that the government’s intervention is necessary, as Dangote cannot clear the subsidy alone. The Major Energies Marketers Association of Nigeria official suggests that the government’s Compressed Natural Gas initiative aims to tackle the cost of subsidy on PMS. However, marketers are unwilling to buy petrol at the international market price from Dangote, and there is no pricing template for petrol under the Petroleum Industry Act.
The Independent Petroleum Marketers Association of Nigeria’s National Operations Controller, Mustapha Zarma, states that unless the government intervenes in the price of Dangote petrol, marketers will not be able to buy it due to the prevailing retail price cap. The finance ministry’s post on X (formerly Twitter) highlights the committee’s progress on key initiatives, including the upcoming commencement of naira payments for crude oil sales to Dangote Refinery starting October 1, 2024.
