Nigerians face potential petrol price hike as NNPC exits middleman role
Petrol prices are likely to rise again following the Nigerian National Petroleum Company Limited’s (NNPCL) decision to end its exclusive offtake agreement with the Dangote Refinery, allowing other marketers to purchase the product directly from the facility.
The current fuel price adjustment took effect in August when the NNPCL raised the pump price from N568 to N855 per litre in Lagos, with prices nearing N900 in other parts of the country.
The NNPCL’s exit as a middleman for the Dangote Refinery means that the national oil company will no longer cover the price gap between the facility’s price and the selling price to retailers, previously absorbing a subsidy of N133 per litre.
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This decision is viewed as a significant shift towards a fully deregulated oil market.
Marketers can now negotiate petrol prices directly with the Dangote Refinery under a “willing buyer, willing seller” arrangement, aligning with practices for other deregulated products such as diesel and kerosene.
In September, Devakumar Edwin, Vice President at Dangote Industries, indicated that the 650,000 barrels per day refinery had begun processing petrol, initially with the NNPCL as the sole off-taker. However, recent adjustments now allow independent marketers to engage directly with Dangote.
“We can no longer continue to bear that burden,” an NNPCL official told Premium Times, highlighting the financial strain of the subsidy system.
Proofreading by Uchechi Ojo, Sub-editor at Neptune Prime.
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