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By Adewale Sanyaolu
The Independent Petroleum Marketers Association of Nigeria (IPMAN) has announced plans to finalise the pricing structure and evacuation logistics for the distribution of petrol from the Dangote Refinery to its members.
The move, according to players, is set to redesign Nigeria’s downstream petroleum landscape, by providing more autonomy to marketers in sourcing petroleum products.
IPMAN’s move is believed to be directly linked to the reported withdrawal of the Nigerian National Petroleum Company (NNPC) Ltd as the sole offtaker of petroleum products from the Dangote Refinery.
IPMAN National PRO, Mr. Okanlawon Olanrewaju, told Daily Sun in a telephone interview yesterday, that the withdrawal of NNPC Ltd as the sole offtaker from the Dangote refinery signals the beginning of full deregulation.
“As of last week, IPMAN leadership was still at the Dangote refinery, and this week again, we will be there to finalize talks around pricing and evacuation. The initial bottleneck was the NNPC Ltd. But now that they have stepped down from their role, we will have meaningful discussions,” he said.
Okanlawon added that the intervention of NNPC Ltd as the initial product offtaker was not designed to be a permanent measure but a temporary solution to bring some measure of relief for Nigerians.
“The truth is that the burden of fuel subsidy was weighing down the finances of NNPC Ltd and they cannot continue to operate such a business model because it was no longer sustainable. Even as a temporary offtaker, the company was still subsidising,” he said. He indicated that the withdrawal of NNPC was a welcome development and the best thing to happen to the industry because this will encourage competition in the downstream petroleum industry and give players in the sector the opportunity to operate on a level playing field.
Olanrewaju explained that this latest move by NNPC Ltd will go a long way in curbing the excesses of private depot owners who will increase petrol prices arbitrarily through all manner of hidden charges.
“Now marketers can bring their trucks to the Dangote refinery and load products. All the middlemen in the value chain would have been eliminated. Additional expenses incurred through the use of private depots since all NNPC depots have gone moribund would have been eliminated,” he said.
In addition, he noted that those still interested in importing petroleum products, especially major marketers, will also be free to do so since the sector has now entered full deregulation, thereby enhancing competition.
The IPMAN PRO assured that Dangote’s production volume would be enough to cater to domestic demand.
NNPC had explained that the Dangote Refinery and any other domestic refinery were free to sell directly to any marketer on a willing buyer, willing seller basis, which is the current practice for all fully deregulated products such as diesel, aviation fuel, and kerosene.
Executive Vice President, Downstream, NNPC Ltd, Adedapo Segun, explained that NNPC Ltd became the sole supplier of fuel from Dangote because of the scarcity of foreign exchange and its volatility, which has made oil marketers stay away from the market.
“I must say that today NNPC is the sole provider of PMS (petrol) to the marketers, and we understand why that is so.
“NNPC is a sole provider, not because NNPC wants to be, but because all the marketers are not playing in that space for reasons that we understand. One is the paucity of dollars and the volatility that was experienced in the foreign exchange rates.
“For example, you buy products you want to sell, and the exchange rate moves against you, a loss crystallizes immediately. And you know, sometime last year, after the new government came in, it became obvious immediately that there was no provision for subsidy for the second half of the year, and prior prices were reflecting markets.
“But towards the end of the year and the beginning of this year, the exchange rates moved significantly, creating a situation where the naira value and price, or naira being paid for PMS, did not cover the cost of providing it,” he explained.
