Dealers Demand ₦850/Litre Diesel As Dangote, Marketers Meet

Oil marketers have called for a downward review in the
pump price of the Automotive Gas Oil, popularly called diesel, being
produced by the Dangote Petroleum Refinery to between N700 and
N850/litre, as operators plan to meet managers of the refinery next
week. The largest downstream marketing association,
the Independent Petroleum Marketers Association of Nigeria, which made
the call in an interview with The PUNCH, said the N1,225/litre diesel
price from the indigenous refinery was high because the commodity was
produced in Nigeria and not imported.The Petroleum Products Retail Outlets Owners Association of Nigeria also called for a reduction in the price of Dangote diesel.The
groups called for the intervention of the Federal Government and urged
the managers of the refinery to consider the high cost of logistics
required to transport the product from Lagos where the refinery is
located.The oil marketers pointed out that the product is
being landed in Nigeria by some importers at N1,250/litre following the
appreciation of the naira against the dollar, adding that this should
be another reason why the Dangote refinery that produces diesel in
Nigeria should cut down its price.According to the oil
marketers, diesel produced at the Dangote refinery has no vessel cost,
import charges, and other costs associated with the costs associated
with the importation of the commodity into Nigeria.This came
as it was gathered that the marketers under the aegis of IPMAN and
Independent Petroleum Marketers Association of Nigeria, and PETROAN held
separate meetings on Monday to deliberate on the pricing of petroleum
products from the refinery, as well as other issues. Ngnewshub had reported on April 3, 2024, that the $20bn refinery started
pumping out diesel to the domestic market the previous Wednesday (March
27, 2024).justThe report stated that the refinery sold a minimum
of one million litres to each registered oil marketer that got the
product from the plant since it commenced diesel sale.Officials
of the multi-billion dollar plant and oil dealers had confirmed that the
product was dispensed to marketers at between N1,225/litre and
N1,300/litre depending on the volume of purchase.Reacting to the
cost of the commodity during an interview with our correspondent on
Monday, the National Public Relations Officer, IPMAN, Chief Chinedu
Ukadike, commended the refinery for the commencement in the release of
refined products.He, however, urged the managers of the plant
to review the cost of the product downward, providing reasons why the
price of Dangote diesel should be cheaper than what was imported.Ukadike
said, “During the construction of the Dangote refinery, we supported
and welcomed it. Also, it was our prayers that an indigenous refinery be
opened so that it will limit the expenses of logistics in terms of
importation, clearing, and other activities associated with bringing
products into the country.“These are some of the hurdles
that necessitated the high cost of AGO or diesel being imported into
Nigeria. So now that a private refinery with a very high capacity has
started producing petroleum products here in Nigeria, we would have
appreciated that its products being sold to Nigerians will be cheaper
than the landing cost of imported products.“The dollar is
currently about N1,270 to N1,290 and it is coming down. So if the dollar
is a determinant factor in terms of the importation of petroleum
products and diesel is sold by those companies that imported at
N1,300/$, I believe that Dangote refinery should not measure the price
of its diesel with the parameter of the forex.”The IPMAN PRO stated that forex should not be the benchmark for the price of Dangote refinery’s diesel.“Also,
some other expenses on the cost of diesel produced by the refinery have
been waived. So those expenses should reflect on the price of the
product. The refinery is in Lagos, so there is no vessel voyage cost and
this should be deducted from the price Dangote is giving us.“Other
marketers who imported their products are landing it at between N1,200
and N1,250/litre since the drop in forex. So Dangote should be giving us
his product at around N700 to N850/litre since he is producing it here.“When
we buy at that price, it will further strengthen the naira, minimise
profiteering and reduce the cost of goods and services that are
transported using diesel. If you minus the cost spent on vessels,
importation charges, and the cost of foreign exchange to some extent,
the price of diesel will drop,” Ukadike stated.He said oil
marketers would also submit their price request to the Dangote refinery
next week, adding that IPMAN would seek the intervention of the Federal
Government on the matter.“We are trying to seek a meeting with
the refinery’s commercial department. I just came out of a meeting to
speak with you, where we are discussing how to be able to persuade them
to review their prices and also ask the government to intervene,” he
said.When asked to state when the association would meet with
the refinery, Ukadike replied. “By next week we should get an
appointment. That should be after the Sallah. It was earlier reported that some members of IPMAN had started
purchasing the product from the refinery at the N1,225/litre price,
though the association had stated that it would seek its price from the
managers of the refinery. “They started pumping out diesel to
marketers last week. They also promised to sell aviation fuel soon. Some
of my members confirmed this to me after making the purchase,” the
National President, the Independent Petroleum Marketers Association of
Nigeria, Abubakar Maigandi, had told our correspondent last week.He
added, “So some of our marketers have started getting the product, but
as an association, we have not got the product yet, because we want to
get the actual rate that it will be sold to us when we buy in bulk.
However, they have started selling diesel because some of our marketers
have started buying. “They are selling at N1,225/litre and the
minimum volume they are giving is one million litres per marketer. Also,
they assured us that they will release more products, but for now this
(diesel) is what they are starting with. So we are expecting them to
release PMS anytime from now.”Maigandi had said the move by
Dangote would definitely lead to a crash in diesel price, as the
commodity rose to a high of about N1,700/litre recently. “The
price of diesel is going to fall because of the release of products from
Dangote refinery. It is already coming down in Lagos,” Maigandi stated.Another
oil marketer, who is the Chief Executive, AF Ralph Oil and Gas
Ventures, Dr Ralph Arokoyo, had also confirmed that the refinery started
the sale of diesel to dealers, adding that the plant started dispensing
the product about two weeks ago.Asked if the Dangote refinery
had started supplying diesel to the market, Arokoyo replied, “Yes they
have started. They started diesel sales last Wednesday and they have
sold to many marketers including members of IPMAN and MEMAN (Major
Energy Marketers Association of Nigeria), as well as other private
registered independent dealers.”PETROAN reactsThe
President, the Petroleum Products Retail Outlets Owners Association of
Nigeria, Billis Gillis-Harry, also stated on Monday that the cost of
diesel from the Dangote refinery should be reduced.He
said, “PETROAN has an agreement with Dangote to supply to us at N1,200,
but we will still request a downward review. We have over 19,000 members
and over 6,800 people are active and ready to do business. So we need
to talk about so many issues.“First of all, the logistics from
Lagos to Port Harcourt, Calabar, Warri, Zamfara, and other locations is
not very easy. So those in Lagos can take the N1,200/litre price because
their cost of logistics is low, but this is not so for dealers outside
Lagos.“So we will certainly still engage with them on how prices
will come down. However, the good news is that they have rolled out
products and we salute and congratulate them, especially the Executive
Director, Commercial, Mr Rabiu Umar, for his courage in making sure
Nigeria is wet with refined products.”Gillis-Harry, however,
stated that the refinery would have to recoup the funds used in
constructing it, as several billions of dollars were borrowed to develop
the plant.“The refinery has collected billions of
dollars as loans to put itself up. It must start to work to pay back
these loans. And the only way to get back this money is by producing and
selling, as well as exporting.“Now he has started with
domestic sales. So organisations like ours will have to sit down with
them and work out the details and this will enable us to know exactly
what their cost elements are. We want to sell and they want to produce,”
he stated.The PETROAN president said his association would not
want to speak on the proposed cost of petrol that should come from the
Dangote refinery until the plant starts producing the commodity for the
domestic market.“You can’t even talk about price when
they’ve not started producing. Yes, they have discussed with PETROAN
that they would produce PMS, but they have not started producing,” he said.When
told that the refinery was working to release PMS in May, Gillis-Harry
said, “They’ve not started producing. So we won’t work on projections.
Let them produce first and we will then know what their input, output,
and pricing are. That is the only time we can talk about what prices
they should sell.“Dangote refinery has informed PETROAN that
they will produce PMS but we await their production, and then we will
know the inputs of their production before we talk about the pricing. We
can’t tell them what to sell now.”Officials of the multibillion-dollar refinery decided to stay mute despite several attempts to get their input on the matter.However,
a senior official at the Dangote refinery confirmed last week that the
plant had started the sale of diesel to marketers, as the source noted
that Premium Motor Spirit, popularly called petrol, would soon be
released to the market. “The product (diesel) is everywhere and
they (marketers) are accessing it with ease. The product has been on
sale to marketers since last week and the transactions have been better.
“The price of the product in various locations of the country will come
down, and it is already coming down in many parts of Lagos since we
started releasing products to marketers,” the official, who spoke on
condition of anonymity due to lack of authorisation to speak on the
matter, had stated.The Dangote refinery has faced a series of
hurdles as it strives to release refined products into the market after
it was officially inaugurated by former President Muhammadu Buhari in
May last year. Recall that last year
indications emerged that lingering regulatory approvals stalled Dangote
Petrochemical Refinery’s plan to release aviation fuel (Jet A1) and
diesel for sale in the Nigerian market in January.The report
stated that weeks after the January 31 timeline set by the management of
Africa’s largest refinery to begin the sale of its petroleum product in
the local market, the refinery was still battling to cross the hurdles
of the several layers of regulatory approvals.It stated that the
development came after the refinery began the production of refined
petroleum products at the expansive facility.On January 12,
2024, Dangote refinery announced that it had commenced the production of
Automotive Gas Oil, popularly called diesel, and aviation fuel or
JetA1. Aliko Dangote, in a statement issued by his firm at the
time, thanked President Bola Tinubu for his support, encouragement, and
thoughtful advice towards the actualisation of the project.Dangote
also thanked the Nigerian National Petroleum Company Limited, Nigerian
Upstream Petroleum Regulatory Commission, NMDPRA, and Nigerians for
their support and belief in the historic project, as he revealed that
the facility would pump out diesel and aviation fuel in January, subject
to regulatory approvals.He said, “We thank President Bola
Tinubu for his support and for making our dream come true. This
production, as witnessed today, would not have been possible without his
visionary leadership and prompt attention to detail. “His
intervention at various stages cleared all impediments thereby
accelerating the actualisation of the project. We also thank the NNPC,
NUPRC, and NMDPRA for their support. These organisations have been our
dependable partners in this historic journey. “We also thank
Nigerians for their belief and support in this project. We have started
the production of diesel and aviation fuel, and the products will be in
the market within this month once we receive regulatory approvals.”The
refinery, Africa’s largest with a nameplate capacity of 650,000 barrels
per day, was built on a peninsula on the outskirts of the commercial
capital Lagos.Nigeria has for years relied on expensive imports
for nearly all the fuel it consumes but the $20bn refinery is set to
turn it into a net exporter of fuel to other West African countries, in a
huge potential shift of power and profit dynamics in the industry. Dangote exports productsThe
commencement of diesel sale in Nigeria by the plant is not its first
refined products sale, as The PUNCH reported in February that the
refinery issued tenders to sell two fuel cargoes for export.This
was the first from the new refinery, as the report stated that this was
confirmed by trading sources with knowledge of the matter who spoke to
Reuters at the time.Nigeria has for years relied on expensive
imports for nearly all the fuel it consumes but the $20bn refinery is
set to turn it into a net exporter of fuel to other West African
countries, in a huge potential shift of power and profit dynamics in the
industryReuters had stated in its report that Dangote
declined its request for comment. The oil firm also remained mute to
several inquiries by The PUNCH at the time.The report stated
that the first cargo was 65,000 metric tonnes of low-sulphur
straight-run fuel oil, which Dangote awarded to Trafigura, which was due
to load at the end of February, three of the sources said, according to
Reuters, as it added that Trafigura declined to comment at the time.At least one refiner said they had been offered the cargo by Trafigura without elaborating further.The
second tender was for about 60,000 tonnes of naphtha, three other
sources had stated. Two of them added that the tender closed on February
15. Loading details were not immediately available at the time.Sources
had also told Reuters that the refinery was preparing to deliver its
first fuel cargoes to the domestic market within weeks.The two
fuels on offer were typical products of running light sweet crude
through a crude distillation unit in a refinery without further
upgrading capacity.The refiner began buying crude in December last year and Nigerian National Petroleum Company Limited has been the main supplier.Dangote
has also purchased some US oil and reportedly received two million
barrels of US WTI Midland in early March, according to LSEG and Kpler
ship tracking.