KEY POINTS
- Dangote Refinery can now sell petrol directly to petroleum marketers.
- Under the new purchase model NNPCL is no longer the sole supplier of the product.
- This is part of Nigeria’s shift to a deregulated petroleum market.
Announcing the development, the Federal Government said that all petroleum marketers in Nigeria are now free to purchase Premium Motor Spirit (PMS) directly from Dangote Refinery in Lagos.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, led the technical committee meeting that took the decision, marking a historic shift in Nigeria’s approach to the structure of its petroleum market.
The Nigerian National Petroleum Company Limited (NNPCL) was the only off taker of petroleum products from local refineries like Dangote Refinery, until now.
However, this is the new directive which will enable marketers to go around NNPCL and deal directly with the local refineries ushering in a new era of the industry.
Market efficiency to be boosted by new direct purchase model
With the new market structure, we can now, for example, have petroleum product marketers negotiating with local refineries, notably the Dangote Refinery, on commercial terms, thus promoting greater competition and reducing the cost and complexity of the supply chain. They hope this direct purchase model will improve product availability and stabilize the market.
“The most important change to the new regime is that now petroleum marketers can buy PMS directly from local refineries.” Minister said in a statement, adding: ‘This transition will enhance our efficiencies in product availability and stability the market conditions for the benefit of all Nigerians.’
This also forms part of the government’s wider move towards a fully deregulated market, which will reduce inefficiencies in the fuel supply chains and assure a more smooth fuel supply situation across Nigeria.
As is the case with an increasing local PMS production, the market is becoming more competitive and stable for consumers and suppliers.
New era in Nigeria’s petroleum industry
This is a change that signals better times for Nigeria’s petroleum industry as marketers are now more flexible in sourcing products. Moreover, The Implementation Committee of the Federal Government on the Sales of Crude Oil and Refined Products in Naira, which oversees the transition, has reassured the industry of continued engagement with the stakeholders to ensure smooth adoption of the new system.
According to Vanguard, This represents a new chapter in Nigeria’s petroleum industry as an opportunity could exist to increase supply chain efficiency, increase competition and ultimately benefit all Nigerians by stabilizing market conditions.
