Nigeria’s local fuel traders can now directly purchase petrol from the Dangote Oil Refinery, ending the state-owned NNPC’s long-held exclusive purchasing rights. This move is part of the country’s broader strategy to fully deregulate its refining sector, as confirmed by Finance Minister Wale Edun on Friday.
The Dangote Oil Refinery, which began processing petrol in September, had initially named NNPC Ltd as its sole buyer, allowing the government to maintain oil product subsidies. However, on Wednesday, NNPC raised fuel prices by more than 15%, selling petrol at market rates for the first time in over three decades. This signalled the end of a subsidy programme that had placed a significant strain on the state’s finances.
“This direct purchasing system allows marketers to negotiate commercial terms directly with refineries, fostering a more competitive market and improving the efficiency of the petroleum supply chain,” said Edun in a statement.
With a capacity of 650,000 barrels per day, the Dangote Refinery is set to significantly reduce Nigeria’s costly dependence on imported oil products. A government committee, led by Edun, approved the sale of crude to the Dangote Refinery in local naira currency on October 1st, with an agreement that the refinery will meet all of the nation’s fuel needs. This marks a major step toward creating a fully deregulated market.
The new directive will also apply to all local refineries operating within Nigeria.
Credit: Reuters (Text Excluding Headline)
