In a landmark agreement, Nigerian oil marketers have partnered with Dangote Refinery for the daily supply of 28 million litres of petrol for domestic consumption. The deal, which will span six months, marks a significant step towards stabilising fuel supply and prices in the country.
Key Agreements in the Deal
- Oil marketers will now purchase all petroleum products directly from Dangote Refinery, bypassing imports unless the refinery cannot meet demand.
- The refinery reduced its ex-depot price for Premium Motor Spirit (PMS) to ₦970 per litre, down from ₦990, as a goodwill gesture to Nigerians.
Commitments from Dangote Refinery
Dangote Refinery, located in Lagos, has assured a steady supply of high-quality, environmentally friendly petrol. Anthony Chiejina, Group Chief Branding and Communications Officer, stated that the price reduction is a way of appreciating public support while complementing government measures to stabilise the downstream sector.
The refinery also announced plans to scale up production to meet and exceed Nigeria’s domestic demand, dispelling fears of shortages in supply.
Implications for the Nigerian Market
1. Price Stability and Local Supply
The direct supply agreement eliminates the need for most imports, reducing reliance on foreign markets. This move is expected to stabilise pump prices, which have seen fluctuations in recent months.
2. Collaboration Among Stakeholders
The deal involved major stakeholders, including the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Nigerian National Petroleum Company Limited (NNPCL), and independent refiners like Waltersmith and Aradel. Such partnerships aim to foster collaboration, reduce conflicts, and enhance transparent communication.
3. Increased Domestic Refining Capacity
With Dangote Refinery operational and other domestic refineries ramping up, Nigeria is poised to shift from being an importer to a self-sufficient producer of refined products. This change is expected to significantly reduce the cost of imports and conserve foreign exchange.
Global Exports on the Rise
In addition to meeting domestic demand, Dangote Refinery is expanding its export operations. Between January and October, it exported significant volumes of aviation fuel, gasoil, and naphtha to countries including South Korea, Ghana, Iceland, and the UK. By 2026, Nigeria could triple its refined product exports, positioning itself as a major player in the global energy market.
Looking Ahead
The agreement signals a turning point for Nigeria’s downstream sector. By ensuring consistent supply, reducing import reliance, and stabilising prices, the partnership between Dangote Refinery and oil marketers promises to improve economic outcomes for both consumers and businesses.
This development underscores the importance of leveraging local refining capacity and fostering collaboration among key players to build a sustainable and efficient energy sector.