NNPCL, Dangote Refinery Struggle to Settle Petrol Price Dispute

Negotiations between NNPCL and Dangote Refinery stall over pricing, delaying product rollout

by Adenike Adeodun

KEY POINTS


  • NNPCL and Dangote Refinery are struggling to agree on petrol pricing.
  • Negotiations have stalled, delaying Dangote’s product rollout to local sellers.
  • Diesel pricing has seen reductions, but local patronage remains low.

There has been uncertainty around petrol pricing in Nigeria. Supply bottlenecks in the petroleum downstream sector caused uncertainty. NNPCL and Dangote Refinery have been struggling to an acceptable petrol price for all stakeholders.

The contention is about striking a balance between the market and affordability. A Vanguard report states that both parties have a wide gap between their offer prices. This has paused negotiations for over two weeks, making it difficult for Dangote to roll out its product.

NNPCL is bidding for a pricing plan that is in alignment with the subsidy system but Dangote Refinery is looking to fix a price that reflects the market. Both parties are looking to agree on a price that is both stable and sustainable.

Today, there will be another round of meetings at the NNPCL headquarters. This meeting might lead to a favourable outcome for both parties.

NNPCL’s backlog and portal shutdown

NNPCL announced it will reopen its purchasing portal immediately after clearing the backlog of petrol orders. Marketers had earlier complained about the portal shutdown. They added that the situation encourages round-tripping of product supplies which would drive up the prices of petroleum products.

In a press statement yesterday, Soneye, said: “We have a significant backlog to address. We closed the portal to avoid holding marketers’ funds for too long. The company promised to reopen the portal once we sufficiently reduce the backlog.

Diesel price reductions and market reactions

In a recent development, marketers of petroleum products in Nigeria petitioned the president to increase the price of the product, which is sold at N900 per litre.

According to a report by Vanguard, the Dangote refinery has consistently reduced the price of the product from N1,200 to N1,000 and now N900 per litre. The vice president of Dangote Industries Limited, Devakumar Edwin, reported that petroleum marketers have shown their dissatisfaction concerning the low price of diesel and it has affected their revenue and profit margins.

He also highlighted some of the challenges facing the Dangote Refinery. He added that the refinery exports most of its diesel and aviation fuel because of low local patronage. Edwin added “We have been exporting aviation fuel, we have been producing kerosene, we have been producing diesel, but yesterday, we started the production of PMS (petrol)”

Edwin later added that if traders or NNPC won’t buy the products, the company will end up exporting the PMS as it is already going with the aviation jet and diesel.

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