November 4, 2024/CSL Research
In a recent press release, Dangote Group’s Communications Officer, Anthony Chiejina, addressed what he described as misinformation from IPMAN, PETROAN, and other associations, which have claimed they could import Premium Motor Spirit (PMS) at lower prices than those offered by the Dangote Refinery. Chiejina clarified that the Dangote Refinery prices are benchmarked against international rates and are competitive when compared to import prices. Following the deregulation of the petroleum sector, he noted that NNPC set a benchmark by selling PMS to domestic marketers at ₦971 per litre for ship sales and ₦990 per litre for truck sales. The Dangote Refinery currently offers PMS at ₦960 per litre for ship sales while maintaining the ₦990 rate for truck sales.
Aliko Dangote, Chairman of Dangote Group, recently encouraged Nigerian petroleum marketers—including IPMAN, PETROAN, other associations, and NNPC—to source their petrol directly from the Dangote Refinery. By doing so, he emphasized, the country could conserve its scarce foreign exchange (FX) resources, reduce reliance on imported PMS, and foster a more sustainable approach to meeting Nigeria’s fuel demands.The Lekki-based Dangote Refinery, which began distributing PMS to the Nigerian market on September 15, 2024, is fully prepared to supply local demand. Operating at full capacity, the refinery can produce over 30 million liters of fuel daily and currently holds a reserve of 500 million liters—sufficient to meet Nigeria’s fuel needs for over 12 days without requiring imports.Despite this available local supply, many petroleum marketers continue to import significant volumes of petrol, citing the full deregulation of the downstream oil sector, which allows them to source fuel independently from overseas.
The release of the September 2024 PMS pricing template for the estimated pump price based on Dangote Refinery Limited’s petrol by the NNPC Limited put the refinery’s PMS gantry pricing at ₦898.78 per litre, reflecting a US$-based crude oil purchase/ petrol sale pricing arrangement between the two parties. NNPCL claimed to have purchased petrol from Dangote Refinery at ₦898 per litre. However, Dangote Refinery refuted this, stating the claim was misleading and emphasising that the price included NNPCL’s additional costs, such as profit margins and other expenses. NNPC later raised petrol prices by 14.8% on 9 October 2024, increasing the rate from N897 to N1, 030 per litre. This increase contradicted expectations that the “crude-for-Naira” deal between the Federal Government and Dangote Refinery would reduce pump prices starting 01 October 2024. The template released in September connotes that the NNPC Limited ceases to bear any form of under-recovery on the sale of PMS, as the totality of pricing levels from production to distribution cost is passed into the estimated pump price. Any changes to price levels (discount or premium) are to be passed on 100% to the public.
