The Federal Government is not considering involving in decision as to determine how much Dangote refinery would sell its Premium Motor Spirit (PMS) known as petrol.
In other words Nigeria would allow the refinery’s management to set the price of petrol it sells, a move that’s poised to refashion the government’s control over what customers pay for fuel.
Until now, Nigeria has imported all of its petrol and subsidized the price at a hefty annual cost but in a major change, Dangote’s massive plant in Lagos is starting to locally refine gasoline.
Nigeria will allow Dangote to set the price of petrol to petroleum marketers starting next month, according to officials with knowledge of the matter.
They asked not to be identified as they’re not authorized to speak to the media.
The Nigerian National Petroleum Company Limited (NNPCL) the sole importer of petrol has since August 2023 been reselling the product below market cost to temper prices, after a brief removal of the subsidy pushed up inflation and fanned public protests.
This week it lifted the price by 45 per cent to 897 naira ($0.56) per liter, moving it closer to market prices.
The government said Dangote will be free to set its own price.
“Dangote Refinery will certainly not sell their products below market value as a business that was set up to make profit,” said government spokesman Temitope Ajayi. “I don’t see how NNPC or the federal government will control price for a private business,” he said.
The role of the petroleum industry regulator “will be to ensure products quality and fair pricing so that the business doesn’t take undue advantage of the citizens or rip them off,” Ajayi said.
The changes occur amid severe gasoline shortages in major Nigerian cities after debts incurred by NNPC, in part due to the subsidy, disrupted its ability to supply petrol. It said it is owed 7.8 trillion naira ($4.9 billion) by the government in subsidy debts for the seven months to July.
Going forward, petrol marketers will be allowed to buy products directly from the Dangote Refinery.
A spokesperson from Dangote Industries didn’t immediately respond to requests for comment.
The facility at full rates is expected to be able to produce about 330,000 barrels a day of petrol, according to Randy Hurburun, senior refinery analyst at consultancy Energy Aspects Ltd. That’s more than 1 per cent of global demand for the road fuel, which is about 27 million barrels a day and more than enough to meet the UK’s entire requirement.
Yemisi Izuora