Nigeria state oil firm agrees to buy, sell Dangote petrol

A Nigerian presidential committee announced on Friday that state-owned oil company NNPC Limited will distribute petrol from the 650,000 barrels-per-day Dangote refinery to the local market, ending the deadlock that had stalled distribution.

The $20 billion refinery, built by Nigerian billionaire Aliko Dangote in Lagos, began processing petrol last week. However, disagreements over offtake rights and pricing had delayed distribution.

"I am glad to announce that all agreements have been finalised, and the first batch of Premium Motor Spirit (petrol) will begin loading on Sunday," Zacch Adedeji, head of Nigeria's tax authority, said.

Adedeji said that in exchange for crude oil, Dangote will supply petrol and diesel of equivalent value to the domestic market, with transactions settled in the local naira currency.

Retail pricing

The Nigerian government previously said it would facilitate the sale of crude to Dangote in naira.

While Dangote's diesel, which has primarily been exported, will now be sold to local fuel traders in naira, NNPC will have exclusive rights to lift petrol and sell locally both in bulk to fuel traders and at its fuel stations for now.

Currently, only about 5% of local fuel traders are purchasing products from the Dangote refinery, which has limited its sales to just 29 tankers of diesel per day, an executive at the refinery said on Thursday.

The executive added that local fuel traders are struggling with the refinery's retail pricing, which they claim is negatively impacting their businesses.

Citing sources within government and NNPC, Nigeria's Punch newspaper reports that the state oil company will buy a litre of petrol from Dangote refinery at a cost of 766 naira ($0.46).

➤ Click here to follow our WhatsApp channel for more stories.