Dangote Refinery may be forced to neglect Nigerian market, opt for petrol export
The situation surrounding the Dangote Petroleum Refinery and its relationship with the Nigerian National Petroleum Company Limited (NNPC) has become increasingly complex.
The refinery, which has recently begun producing petrol, is facing significant challenges in selling its products domestically.
This has led to the possibility that it may resort to exporting its petrol if local buyers, particularly the NNPC and other petroleum marketers, do not engage in purchasing it.
Current dynamics between Dangote Refinery and NNPC
The NNPC has stated that it will only buy petrol from the Dangote refinery if the prices are lower than those available on the international market. This condition creates a challenging environment for Dangote, as it limits their ability to sell domestically at competitive prices.
READ ALSO: NNPC says Dangote free to sell petrol to any marketer at any lower price
Aliko Dangote, president of the Dangote Group, had previously indicated that his refinery was prepared to roll out petrol as soon as arrangements with the NNPC were finalized. However, this expectation has not materialized due to ongoing negotiations and pricing disputes.
Devakumar Edwin, vice president of oil and gas at Dangote Industries Limited, confirmed that if local traders or the NNPC do not purchase their petrol, they will have no choice but to export it. This statement underscores a shift in strategy for the refinery, which was initially intended to supply local markets.
Role of local oil traders
Meanwhile, there have been reports of local oil traders attempting to block sales of Dangote’s fuel within Nigeria. This blockade further complicates domestic sales efforts and pushes the company towards exporting its products instead.
Experts have suggested that government support is crucial for ensuring that local refineries like Dangote’s can thrive without being undermined by foreign imports or unfavorable market conditions.
The Dangote refinery claims to produce high-quality petrol compliant with international standards (Euro 5 grade), making its products suitable for export markets where quality regulations are stringent.
The potential shift towards exporting rather than supplying locally could have significant economic implications for Nigeria, which currently relies heavily on imported refined petroleum products despite being a major oil producer.
