The Nigerian National Petroleum Company Limited (NNPC) has ended its exclusive purchasing agreement with Dangote Refinery, allowing other marketers to buy petrol directly.
Report says this shift, changes market dynamics to a “willing buyer, willing seller” model, consistent with Nigeria’s deregulated product practices.
The Dangote Refinery, boasting a capacity of 650,000 barrels per day, commenced petrol production in September.
The Nigerian National Petroleum Corporation (NNPC) served as the exclusive buyer and commenced the loading of petrol from the refinery on September 15, with access limited to major marketers, excluding independent operators.
Recently, updates have enabled the refinery to sell to any marketer, effectively eliminating the single-offtaker policy.
Market Implication
The Nigerian National Petroleum Corporation’s (NNPC) exit as the exclusive petrol buyer is a key move towards a fully liberalized fuel market, potentially ending petrol subsidies.
With NNPC no longer absorbing the price differential, marketers will now acquire petrol directly from Dangote at cost and set their own prices. This shift may result in increased fuel prices for consumers.
Marketers now have the option to source petrol from multiple suppliers, rather than relying solely on Dangote. This increased competition could lead to greater supply stability throughout Nigeria.
