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Dangote Refinery Grants NNPC Exclusive Buying Rights as Petrol Production Commences

The Nigerian National Petroleum Company Limited (NNPC) has secured exclusive purchasing rights for the Premium Motor Spirit (PMS), commonly known as petrol, refined by the Dangote Refinery and Petrochemical Company. This development comes as the refinery begins processing petrol after facing delays due to recent crude oil shortages.

Located on the outskirts of Lagos, the $20 billion Dangote Refinery started operations in January, producing various petroleum products, including naphtha and jet fuel. With a capacity of 650,000 barrels per day, it is Africa’s largest refinery and is expected to reduce Nigeria’s heavy dependence on imported oil products significantly.

“We are currently testing the gasoline product, and it will soon be flowing into the product tanks,” stated Devakumar Edwin, Vice President of Dangote Industries Limited. However, Edwin did not specify when the gasoline would be available on the local market. He mentioned that the state-owned NNPC, Nigeria’s sole importer of petrol, would exclusively purchase its petrol.

“If there is no domestic buyer, we will export the petrol, as we have been doing with our aviation jet fuel and diesel,” Edwin added.

The introduction of Dangote Refinery’s petrol into the Nigerian market is expected to alleviate some of the NNPC’s challenges in supplying the local market. The company has been struggling with debts totaling $6 billion to oil traders since January, impacting its ability to maintain a steady supply. This has resulted in persistent fuel shortages and long queues at petrol stations since July. Moreover, fuel prices have surged by 45% from the official price of 617 naira ($0.3942) following the removal of subsidies last year.

Clementine Wallop, Director for Sub-Saharan Africa at political risk consultancy Horizon Engage, commented, “The news that Dangote is processing gasoline comes at a crucial time, especially given NNPC’s recent statements about its difficulties in securing imported supply due to financial strain.” She emphasized the need for greater transparency in NNPC’s finances and questioned how the company would manage its purchasing from Dangote.

Despite being Africa’s top oil producer, Nigeria imports nearly all its fuel due to years of neglect of its national refineries. The NNPC has acknowledged recent reports regarding its significant debt to petrol suppliers, which has placed considerable pressure on the company and poses a threat to the sustainability of the fuel supply.

Olufemi Soneye, Chief Corporate Communications Officer at NNPC, stated, “In line with the Petroleum Industry Act (PIA), NNPC Ltd remains committed to its role as the supplier of last resort, ensuring national energy security.” He assured that NNPC is actively working with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products across the nation.

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