In a recent development, Aliko Dangote, CEO of Dangote Refinery, has addressed growing concerns surrounding the pricing of petrol in Nigeria. During an interview with Bloomberg TV in New York on Monday, Dangote clarified that the Dangote Refinery sold petrol to the Nigerian National Petroleum Corporation (NNPC) at a price significantly lower than the cost of the petrol imported by the national oil company.
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NNPC’s Petrol Imports vs. Dangote’s Pricing
Dangote disclosed that during the period when the NNPC purchased petrol from the Dangote Refinery, the national oil company was simultaneously importing about 800,000 metric tonnes of petrol into Nigeria. According to Dangote, the price at which the 650,000 barrels-per-day refinery sold its petrol to the NNPC was cheaper than the imported fuel.
“What’s going on is not really a disagreement per se. NNPC bought from us this particular one on the 15th of September at the international price. They also bought over 800,000 metric tonnes of gasoline imported,” Dangote said.
He further elaborated that the petrol imported by NNPC was 15-20% more expensive than what Dangote Refinery sold. The issue, he pointed out, stems from the NNPC’s announcement of the petrol price after the first batch of offtake from the refinery, which sparked confusion.
Controversy Over NNPC’s Pricing Announcement
The controversy began when NNPC announced that the Dangote Refinery sold petrol to them at N898 per litre, raising concerns about the overall pricing of petrol in Nigeria. In response, the Dangote Group refuted NNPC’s claim, explaining that the quoted price of N898 per litre did not reflect the true cost of the petrol sold.
Dangote explained that NNPC’s pricing announcement might include profits and other added costs that had not previously been factored into the national oil company’s pricing strategy.
“The ones they bought from us were actually cheaper than the ones they imported. So when they announced our price, it wasn’t really the real price. What they announced was likely what it cost them, including profits and other things. Meanwhile, they’ve never added profit to their cost before,” Dangote stated.
Dangote Refinery’s Pricing and Subsidy Concerns
The Dangote Group further clarified that their petrol prices were subsidized, especially given the international market dynamics. The company purchases crude oil from international suppliers in dollars, which naturally affects their pricing structure. However, even with this challenge, the Dangote Refinery was able to sell petrol to NNPC at a price lower than expected based on global crude oil rates.
According to Dangote, “If they want to remove subsidy, they can announce that they’ve removed subsidy. Everybody will adjust.” This suggests that the controversy could be alleviated by clear communication on subsidy removal and pricing adjustments.
What You Should Know
The NNPC’s recent statement regarding the purchase of petrol from Dangote Refinery has sparked nationwide discussions on fuel pricing, particularly in a country where fuel costs are a sensitive topic. Dangote’s clarification underscores the complexities surrounding fuel pricing in Nigeria, particularly as the country continues its efforts to stabilize fuel prices for consumers. The Dangote Refinery has made it clear that it is committed to providing competitive pricing despite challenges in the global crude oil market.
Final Thoughts
As Nigeria navigates fuel pricing and subsidy reforms, Aliko Dangote’s clarification highlights the importance of transparent communication between government bodies, private companies, and consumers. The refinery’s lower pricing offers a potential solution to stabilize fuel costs if effectively managed. However, ongoing transparency from the NNPC and clear policies on subsidy removal will be key to addressing concerns around petrol pricing in the future.
Source: Nairametrics – We sold to NNPC at a lower price than imported petrol – Aliko Dangote
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