Marketers strategize petrol imports to address supply shortages

Oil marketers have expressed concerns that the production of Premium Motor Spirit (PMS), commonly known as petrol, at the Dangote Petroleum Refinery is currently insufficient to meet domestic demand.

As a result, dealers plan to import petrol to supplement the supply from the $20 billion refinery located in Lekki, as stated by marketers on Tuesday. They have joined forces with the Trade Union Congress (TUC) to urge the refinery to increase its output. Some reports suggest the refinery is producing only about 10 million litres of petrol per day, significantly below the 25 million litres it had initially promised.

When the refinery began supplying PMS to domestic marketers on September 15, the Nigerian National Petroleum Company Limited (NNPCL) announced plans to load 16.8 million litres from the Dangote refinery, in stark contrast to the earlier commitment of 25 million litres daily.

On September 3, 2024, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) indicated that the refinery would supply 25 million litres of petrol daily starting that month, with plans to increase production to 30 million litres in October. The NMDPRA confirmed an agreement with NNPC to supply crude oil to the refinery in local currency, reinforcing its commitment to these targets.

However, oil marketers insist that the refinery’s output falls short of expectations. They have aligned with the TUC in calling for increased production or the necessary imports to fill the gap.

During a recent press briefing, TUC President Festus Osifo highlighted the critical need for alternative petrol sources if the Dangote refinery cannot meet Nigeria’s daily demands. He stated, “If production is below 15 million litres per day, it is insufficient. We must explore every possible means to ensure availability.”

One major oil marketer noted that the refinery’s actual production is even lower than claimed, with current output reportedly around 10 million litres. They also emphasized a broader confusion in the industry, stating that NNPCL currently lacks the vessels necessary to supplement the Dangote refinery’s production.

This situation could have resulted in widespread fuel queues had petrol prices been lower, with many people opting to park their vehicles due to high costs. The drop in consumption has led to notably freer traffic conditions compared to previous times when petrol was subsidized.

In response to these challenges, Hammed Fashola, National Vice President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), announced plans to begin importing PMS soon. IPMAN has acquired tank farms in Calabar and Lagos to prepare for this new phase, although they have not disclosed their capacities.

Fashola defended the decision to import despite government efforts to curb it, stating, “Once there is full deregulation, everyone is free to bring in their products. Without alternatives, we risk a monopoly, which isn’t beneficial for Nigerians.”

He emphasized that the pricing of both imported and locally produced petrol is influenced by international crude prices, indicating that price competitiveness will depend on multiple factors, including exchange rates.

Meanwhile, another oil marketer pointed out that no marketers have yet begun lifting petrol directly from the Dangote refinery; instead, they are receiving allocations from NNPCL, which imports and distributes the product.