The multi-billion dollar Dangote Refinery is finally ready to begin the sale of premium motor spirit (PMS) popularly known as petrol to the Nigerian market. The imminent commencement of commercial sale of PMS by the refinery follows successful test-run of their PMS refining capacity over the past couple of days.
According to industry sources, the product would initially be sold only to the Nigerian National Petroleum Company Ltd (NNPCL) who would then in turn sell to other petrol marketers in the country.
Currently, the NNPC Ltd is the sole importer of PMS and sells to both major and independent marketers of the product at a price lower than the actual landing cost.
If confirmed by either Dangote Refinery or NNPCL, then the anticipated sale of PMS only to NNPCL may be as a result of efforts by the federal government not to pass the entire cost of a liter of PMS to Nigerians, which at current actual market price may be just over N1,117 per liter.
Dangote Refinery commenced refining activities since late last year and started with the roll out of diesel (AGO) and aviation fuel. These products were not subsidised. As Dangote Refinery ramped up purchase of crude oil cargoes, it was anticipated that the refinery was going to begin PMS refining and commercial sale by June, 2024.
However, issues related to crude oil supply security led to row between Dangote and crude oil producers in Nigeria especially the IOCs in addition to the regulators, NUPRC and NMDPRA.
The Federal Government intervened in disagreement and all parties reached an agreement that crude oil should be supplied to the refinery in the local currency, Naira with the products also sold to Nigeria in the local currency.
The Federal Government-brokered crude oil supply deal between Dangote Refinery, NNPCL, NUPRC and others would commence in October. It is expected that this will ease the PMS supply constraints currently being experienced in the country, which has led to scarcity of PMS in some parts of the country.
NNPCL itself has acknowledged that it is facing cash crunch and becoming increasingly unable to meet its financial obligation to its suppliers of petroleum products due to its efforts to sell PMS particularly below the landing cost of the product.