Key Points
- NNPC Limited will supply gasoline from Dangote Refinery to the Nigerian market.
- The $20 billion refinery began processing fuel this week, overcoming pricing and offtake rights disputes.
- Dangote will trade gasoline and diesel for crude oil, with payments made in local currency.
The state-owned oil corporation NNPC Limited has promised to supply gasoline to the local market from the 650,000 barrels per day Dangote Refinery, breaking the impasse impeding distribution, according to a Friday announcement by the Nigerian presidential committee.
According to a report by Reuters, fuel processing started two weeks ago at the $20 billion refinery that Nigerian tycoon Aliko Dangote constructed in Lagos.
Dispute resolution allows fuel processing to start at Dangote refinery
However, distribution has been delayed due to disputes over offtake rights and pricing. Zacch Adedeji, the chairman of Nigeria’s tax administration, stated, “I am happy to announce that all agreements have been finalized and the first batch of Premium Motor Spirit (Gasoline) will begin loading on Sunday.”
He further stated that the refinery would provide petrol and diesel to the domestic market of equal value in return for crude oil, with payments made in local naira currency.
Before now, the Nigerian government promised to help Dangote sell crude for naira. For the time being, NNPC will have the sole authority to lift petrol and sell it locally in bulk to fuel dealers at its gas stations.
Dangote’s diesel, which has hitherto been mainly exported, would now be sold to local fuel dealers in naira.
Domestic fuel dealers face challenges with Dangote’s retail pricing
An executive at the refinery stated on Thursday that just around 5% of local fuel dealers are currently buying products from the Dangote Refinery, which has restricted its sales to just 29 tankers of diesel per day.
The CEO added that local fuel dealers are having trouble with the refinery’s retail pricing, which they allege is having a detrimental effect on their companies.
