…registration for marketers still ongoing at refinery
A measure of relief is coming to the Nigerian economy following the clarification by oil marketers that petroleum products from the $20 billion, 650,000 barrels-per-day Dangote Refinery in Lagos are to be sold in naira and not in US dollars as earlier speculated.
The speculation that the products would be priced in US dollars had caused some apprehension in business circles as importers strain to suck from pinched straws for dollars in a market short on the resource.
Petroleum marketers would have then joined the queue of dollar seekers, exerting further pressure on the market and causing pricing and timeline distortions.
The Dangote Refinery kicked off operations just short of a fortnight ago, with production of diesel and aviation fuel in a first phase of its operations.
The refinery will then extend in phases to the production of petrol, kerosene and liquefied petroleum gas (LPG), also known as cooking gas, among others, with a surplus of each of these products for export.
Industry watchers anticipate the refinery will significantly change some local and global dynamics relating to the supply and sale of petroleum fuels, as well as industry efficiencies, pricing and priorities.
While confirming that the refinery had made clear it would price its products in naira in the local market, the marketers further said dealers in the downstream oil sector also stated that registration process for marketers at the refinery was still ongoing, as many operators had continued to register with the plant.
It was further gathered that officials of the Nigerian Midstream and Downstream Petroleum Regulatory Authority were meeting with the management of the refinery to perfect the pricing template for products produced by the facility.
On 12 January 2024, the Dangote Petroleum Refinery announced the commencement of production of Automotive Gas Oil, also known as diesel, and JetA1 or aviation fuel.
In a statement by the firm, the President, Aliko Dangote said, “We have started the production of diesel and aviation fuel, and the products will be in the market within this month, once we receive regulatory approvals. This is a big day for Nigeria. We are delighted to have reached this significant milestone.
“This is an important achievement for our country as it demonstrates our ability to develop and deliver large capital projects. This is a game changer for our country, and I am very fulfilled with the actualisation of this project.”
Following that announcement, it was reported on 15 January 2023 that seven major oil marketers in Nigeria had registered with the refinery for the lifting and distribution of refined petroleum products produced by the plant.
The seven major marketers include 11 Plc, Conoil Plc, Ardova Plc, MRS Oil Nigeria Plc, OVH Energy Marketing Limited, Total Nigeria Plc and NNPC Retail.
It was further reported that the refinery would supply fuel to about 150,000 retail outlets operated by the Independent Petroleum Marketers Association of Nigeria following a meeting between the management of the refinery and executives of IPMAN.
Responding to an enquiry on whether the plant would dispense its products in dollars, the National Public Relations Officer of IPMAN, Chief Ukadike Chinedu, admitted that it was true that crude oil, being an international commodity, was sold to the plant in dollars.
Ukadike, however, said that this would not make the plant to sell refined petroleum products to the Nigerian market in dollars. He added that other businesses operated in Nigeria by the Dangote Group, carried out their transactions in naira.
“The legal tender in Nigeria is the naira. The cement being sold by Dangote Cement is done in naira, not in dollars. The spaghetti and other essential commodities that he is involved in are all sold in naira.
“So why should one think that he will now sell fuel in dollars? Except for the offshore sales for those who want to move the refined products out of Nigeria using vessels to transport them to other countries. Such customers may get theirs in dollar equivalent,” Ukadike stated.
He noted that another important thing was for the Nigerian government to be able to close up the widening gap in the foreign exchange rate.
“If the exchange rate for the dollar is low, petroleum products would have been cheap in Nigeria because the products are imported. So I believe that Dangote will definitely sell the products in our local currency, which is naira,” he stated.
“And I must state that there is no way the NNPC will bring out its template in naira and Dangote will bring out its own in dollars. It is not possible! So for the cost of their products, I think they are still trying to fix the prices with the regulatory agencies of the Federal Government.
“They will also look at the feasibility of the market and other factors, before announcing their prices for diesel and aviation fuel, which are the products they are producing now. So the price is not out, for once it is out, you’ll be informed.”
Ukadike also stated that more oil marketers were registering with the refinery, adding that IPMAN had been at the forefront of the registration process.
