The Nigerian National Petroleum Company Limited (NNPC) has clarified that its recent pricing of Premium Motor Spirit (PMS) has no effect on the ability of the Dangote Refinery to offer lower prices.
This is coming in response to claims made by the Muslim Rights Concern (MURIC) regarding the Nigerian National Petroleum Company Limited (NNPC Ltd) and the Dangote Refinery Limited (DRL).
MURIC had alleged that changes in NNPC’s PMS pricing could prevent the Dangote Refinery from selling petrol at lower prices to Nigerians and suggested that the NNPC was monopolising the offtake of products from the refinery.
In a statement issued by Olufemi Soneye, Chief Corporate Communications Officer for NNPC Ltd on Saturday, the company emphasised that global market forces, not NNPC’s pricing decisions, determine the cost of petroleum products.
The statement pointed out that the Dangote Refinery, like other refineries, operates in an open market and is free to set prices that reflect current market conditions.
“To set the records straight, NNPC Ltd wishes to further state that the pricing of petroleum products from any refinery, including the Dangote Refinery Ltd, is determined by global market forces.
“The recent changes in PMS prices have no impact on the DRL or any other domestic refinery’s access to the Nigerian market. In fact, if current prices are perceived as high, it presents an ideal opportunity for the refinery to sell its products at lower prices in the Nigerian market.”
This suggests that the refinery has the flexibility to offer competitive rates, providing Nigerians with a possible alternative to high PMS costs.
The NNPC also addressed concerns raised by MURIC about the possibility of NNPC becoming the sole offtaker of products from the Dangote Refinery. The company stressed that its role in the petroleum sector remains market-driven, and it has no intention of monopolising the distribution of PMS.
“We emphasise that there is no guarantee of lower prices associated with domestic refining compared to any global parity pricing framework, as confirmed by the DRL. The NNPC Ltd will only fully offtake PMS from the DRL if the market prices of PMS are higher than the pump prices in Nigeria. The DRL and any other domestic refinery are free to sell directly to any marketer on a willing buyer, willing seller basis, which is the current practice for all fully deregulated products.
“NNPC Ltd has no desire or intention to become the distributor for any entity in a free market environment, and therefore, the notion of becoming a sole offtaker does not arise.”
NNPC’s clarification comes amidst heightened public scrutiny over the cost of petrol, with many Nigerians feeling the pinch of rising prices.
Earlier, Devakumar Edwin, a vice president at Dangote Industries Limited, said the Nigerian National Petroleum Company (NNPC) Ltd, the country’s sole importer of petrol, would exclusively purchase the refinery’s petrol.
The news came a day after the NNPC said it is grappling with severe financial challenges as it battles mounting debt to petrol suppliers, raising concerns over the sustainability of the Nigeria’s fuel supply.
Edwin said, “If no one is buying it, we will export it as we have been exporting our aviation jet fuel and diesel.”
The introduction of petrol from the Dangote Refinery is expected to alleviate some of the supply challenges NNPC has been facing.
Since January, NNPC has accumulated huge debts to oil traders, which has impacted its ability to meet domestic fuel demands. This has led to persistent fuel queues in the country since July, leading to a surge in fuel prices.
Despite being Africa’s top oil producer, Nigeria imports almost all its fuel due to the prolonged neglect of its national refineries. The Dangote refinery’s petrol production is seen as a significant step towards addressing this long-standing issue.
Chioma Kalu
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