By Samuel Timothy
The Nigerian government has permitted petroleum marketers to buy fuel directly from the Dangote Refinery. This new policy, announced by the Minister of Finance, Wale Edun, puts an end to the exclusive role of the Nigerian National Petroleum Company Limited (NNPC) as the sole off-taker of refined products from the refinery. The move is part of the government’s strategy to promote competition and deregulation within the petroleum industry.
New Regulation and Market Efficiency
With the introduction of this new policy, marketers can now engage in direct fuel purchases from the Dangote Refinery, bypassing the NNPC’s intermediary role. This is expected to foster a more competitive market, where marketers negotiate commercial terms directly with the refinery. According to Edun, the framework is designed to create better market conditions for both marketers and consumers.
“New Direct Purchase Model: The most significant change under the new regime is that petroleum product marketers can now purchase PMS directly from local refineries, This marks a departure from the previous arrangement where the Nigerian National Petroleum Corporation (NNPCL) served as the sole purchaser and distributor of PMS from the refineries. With the move, marketers can now negotiate commercial terms directly with the refineries which the minister said will help in “fostering a more competitive market environment and enabling a smoother supply chain for petroleum products”. Edun said
Another notable aspect of this policy shift is the emphasis on crude and fuel sales in local currency. The Federal Executive Council, in partnership with the Naira-crude Sale Implementation Committee, has established a framework that allows for petroleum transactions in naira. This decision aligns with the government’s push for a fully deregulated market where all petroleum products are sold locally in the national currency
According to Edun, the system is fully operational, allowing for both local production and distribution of refined petroleum products. This is seen as a significant step toward reducing Nigeria’s dependence on foreign exchange for its energy needs, while simultaneously boosting local industry
Benefits for Marketers and Consumers
The deregulation of fuel distribution comes at a time when Nigeria’s fuel market has been grappling with high prices and supply bottlenecks. By allowing direct access to the Dangote Refinery, marketers are expected to gain flexibility and autonomy in their business operations. This will likely lead to improved fuel availability across the country, reducing the risks of scarcity and long queues that have plagued the nation in recent months.
In addition, the reduced dependency on the NNPC as an intermediary could translate to lower prices for consumers. Experts believe that as competition increases among marketers, the cost of petroleum products may stabilize, offering relief to Nigerian consumers who have been affected by frequent price hikes
Wale Edun expressed optimism about the future impact of these reforms, stating, “This transition is expected to enhance efficiency in product availability and stabilize market conditions for the benefit of all Nigerians.”
