The much-anticipated commencement of Premium Motor Spirit (PMS) sales by the Dangote Refinery may bring a marginal reduction of ₦36 per litre for Nigerian consumers, following the removal of the Nigerian National Petroleum Company Limited (NNPCL) financing cost for letters of credit. This development could mark a new chapter in Nigeria’s downstream oil sector.
Sources within the Dangote Refinery and the Independent Petroleum Marketers Association of Nigeria (IPMAN) revealed that while the refinery plans to sell PMS directly to marketers, the pricing will be benchmarked against prevailing international market rates.
Details of Pricing and Operations
The 650,000 barrels-per-day refinery is expected to sell petrol at competitive rates, slightly below the current import-dependent pricing. According to insiders, the potential ₦36 reduction stems from excluding NNPCL’s financing cost and profit margin, a move that could slightly ease the burden on consumers.
A Dangote Refinery official noted, “The price is based on international pricing. IPMAN will not get PMS below the global cost price. Any reduction will be limited to NNPCL’s financing cost and profit margin.”
Crude oil, which accounts for 49–59% of the retail cost of PMS, remains a significant determinant of fuel pricing in Nigeria. This pricing structure aligns with the refinery’s earlier statement on November 3, confirming that it benchmarks prices against international standards while maintaining competitiveness.
IPMAN’s Expectations
IPMAN, which controls over 300,000 retail outlets nationwide, has expressed optimism about the direct purchase agreement with the Dangote Refinery. Rising from its Central Working Committee (CWC) meeting in Abuja on November 18, IPMAN’s National President, Alhaji Abubakar Maigandi, confirmed that the refinery had agreed to sell PMS directly to the association.
“We didn’t start lifting products yet, but we received assurance that we will soon begin direct lifting from Dangote. This is why we called this meeting to inform our members to prepare for direct purchase, eliminating third-party involvement,” said Maigandi.
While he refrained from confirming specific pricing details, Maigandi emphasized that the fully deregulated market necessitates discussions with Dangote Refinery on setting competitive rates.
PETROAN Engages Dangote Refinery
The Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN) has also entered discussions with the Dangote Refinery for direct product purchases. PETROAN President Dr. Billy Harry confirmed ongoing meetings but maintained discretion regarding pricing details.
“PETROAN looks forward to securing a fair price from the Dangote Refinery. However, we will not comment further until discussions are concluded,” Harry said.
NNPCL Pricing as a Benchmark
As of November 3, NNPCL sold PMS to domestic marketers at ₦971 per litre for shipment sales and ₦990 per litre for truck sales. The Dangote Refinery’s pricing model undercuts this slightly, offering PMS at ₦960 per litre for shipments while maintaining ₦990 for truck sales.
This pricing strategy underscores the refinery’s commitment to aligning with international benchmarks while ensuring competitiveness in a deregulated market.
Implications for the Nigerian Market
The direct purchase agreements between Dangote Refinery and key stakeholders like IPMAN and PETROAN signal a potential shift in Nigeria’s oil sector dynamics. Eliminating intermediaries could streamline supply chains and marginally reduce costs for consumers. However, the extent of relief will depend on crude oil prices, exchange rates, and other market factors.
As the discussions progress, all eyes remain on the Dangote Refinery to deliver on its promise of competitive pricing and contribute to stabilizing Nigeria’s volatile fuel market.
