Fuel price hike expected as NNPC quits as middleman for Dangote Refinery

The Nigerian National Petroleum Company Limited (NNPC) has formally ended its exclusive offtake agreement with the Dangote Refinery, allowing other marketers to purchase petrol directly from the facility.

According to PremiumTimes, this move is expected to raise fuel prices as the NNPC will no longer cover the price gap between Dangote’s refinery price and the sale price to retailers, previously absorbing a subsidy of around ₦133 per litre.

NNPC’s decision marks a crucial 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.

This direct-purchase system reflects a significant policy change to foster competition and potentially stabilise supply chains amid ongoing discussions over fuel pricing.

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In September, Devakumar Edwin, Vice President at Dangote Industries, indicated that the 650,000 barrels per day refinery had begun processing petrol, with NNPC initially as the sole off-taker.

However, recent adjustments allow independent marketers to engage with Dangote directly.

“We can no longer continue to bear that burden,” an NNPC official told online newspaper, highlighting the financial strain of the subsidy system.

The NNPC had previously bought petrol from Dangote at ₦898.78 per litre but sold it to marketers at a subsidised rate of ₦765