The Nigerian National Petroleum Company Limited (NNPC) has issued a directive to oil marketers to cease the importation of petrol, claiming that the Dangote refinery has sufficient capacity to meet domestic demand.

BusinessDay findings revealed that this directive emerged during a high-level meeting in Abuja attended by NNPC Group CEO Mele Kyari, representatives of Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), and key stakeholders from companies such as 11 Plc, Matrix, AA Rano and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) among other stakeholders.

According to sources privy to the discussions, the NNPC unequivocally read the “riot act” and informed stakeholders that all petrol supply would now depend on approval from the Dangote refinery.

An official present revealed, “NNPC stressed that henceforth no marketer would be allowed to import petrol without specific permission linked to Dangote’s capacity”.

The decision, while strategic, has raised concerns among oil marketers. Stakeholders raised concerns about Dangote Refinery’s ability to reliably supply the market and maintain consistent distribution across Nigeria’s expansive network.

Despite its capacity, marketers questioned whether the refinery’s production and logistics systems were sufficiently prepared to handle the country’s fluctuating demand.

Read also: NNPC fails to meet crude oil target for our refinery-Dangote

Another contentious issue discussed at the meeting was the payment structure proposed by Dangote Refinery. Unlike the traditional importation system, where marketers settle payments upon product arrival at depots, Dangote insists on advance payment from marketers. This change has raised concerns about cash flow and operational viability for smaller players in the downstream sector.

One stakeholder emphasized: “Paying in advance significantly increases the financial pressure on marketers, especially those with limited capital. For decades, we have worked with a payment-after-delivery model, which fits better with our liquidity cycles.”

Since starting in January, Dangote has sold its diesel, jet fuel and other products on the global market, mostly through traders Vitol and Trafigura and international energy company BP, according to S&P Global Commodities at Sea data.

Initially, it agreed on an exclusive supply agreement with NNPC for its petrol, but by November 4, it had also started selling to local marketers, the refinery boss said.

The refinery has reported that its gasoline meets quality standards with a sulfur content below 10 ppm, marking a significant improvement for the Nigerian market, for which 500 ppm was still the standard at the end of 2023.

“There is a price difference between Dangote’s premium petrol of 10ppm and imported petrol of 50ppm,” another source said.

On October 29, the refinery’s CEO Aliko Dangote complained that the refinery was wasting money keeping over 500 million liters (about 3.1 million barrels) of fuel in storage, while the company has blamed illegal low-quality imports for undercutting its prices and threatened to sue state oil company NNPC to continue its fuel imports.

Documents seen by BusinessDay for 42 days from October 1 to November 11, 2024 showed that the NNPC and its partners imported 1.5 million tonnes of PMS, 414,018,764 tonnes of diesel and 13,500 tonnes of jet fuel. This is worth about N3 trillion or $1.8 billion.

“There is a big question mark over where the marketers are getting their dollars to import gasoline,” said a senior oil executive.

A document detailing imported refined products during the review period showed that companies such as Bovas, AA Rano, Matrix, Fatgbems, Deepwater, Raj, T-Time, Rainoil, Prudent, Chisco, Nepal, AYM Shafa, Northwest, Shorelink and others received petrol from various ships in Lagos, Warri, Calabar and Port Harcourt.

Gasoline import saga

Speaking on November 12 at the 42nd Nigerian Association of Petroleum Explorationists (NAPE) Annual International Conference in Lagos, Mele Kyari, NNPC Group Chief Executive Officer (GCEO), said the national oil company has stopped importing fuel.

Kyari said the company is now removing products from the Dangote refinery and other local refineries.

“Today, NNPC does not import any product, we only take from domestic refineries,” he had said.

But in a statement on Friday, the national oil company said Kyari was misquoted.

“The statement by the GCEO, ‘Today, NNPC does not import any product; we only take from domestic refineries, was taken out of context,'” the statement read.

“It should not be interpreted to imply that NNPC Ltd. is bound to be the sole off taker of any refinery or that we will no longer import fuel.

“While NNPC prioritizes sourcing products from domestic refineries, this is dependent on economic viability. If local supply is cost-effective, it will be preferred, but the same principle applies to other marketers, who will also evaluate total costs when deciding whether to buy local or import.”