Local Oil Marketers Shun Dangote Refinery Over Restrictive Trade Policies

Despite its potential to meet local demand, Dangote Petroleum Refinery has struggled to attract patronage from local oil marketers, with only 3% of its diesel and aviation fuel production being purchased domestically.

Devakumar Edwin, Vice President of Dangote Industries Limited, expressed disappointment at the low patronage, revealing that 97% of the refinery’s production has been exported.

However, industry insiders point to restrictive trade policies as a major hindrance. Marketers cite difficulties in meeting the refinery’s minimum purchase requirement of 20,000 metric tonnes of diesel, which is often beyond the capacity of smaller-scale businesses.

Additionally, the requirement for dollar payments, letters of credit, and bills of lading has created significant challenges for local traders.

“Most traders in the diesel business are relatively small-scale and rely on credit to operate,” an executive in the downstream sector noted. “The refinery’s policies have made it difficult for us to purchase from them.”

Local oil marketers have called for a review of these policies, suggesting that flexibility in payment options and purchase quantities would increase patronage.

Contrary to claims of low patronage, documents from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) show that several independent local marketers have purchased significant quantities of diesel and aviation fuel from Dangote Refinery.

Olufemi Adewole, Executive Secretary of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), confirmed that marketers have lifted over 518,500 metric tonnes of diesel and aviation fuel from the refinery.

Adewole emphasized the need for transparency and clarity in the sector, particularly regarding the availability of Dangote Refinery’s petrol.

Estimated Petrol Price Breakdown Revealed

The Nigerian National Petroleum Company (NNPC) Limited has released an updated breakdown of the estimated cost of petrol purchased from Dangote Refinery.

The breakdown shows that NNPC is paying for the petrol in US dollars, with Naira transactions set to commence on October 1st, 2024.

Industry stakeholders continue to advocate for policies that promote local participation and growth in the petroleum sector.