Marketers of petroleum products have stated that the loading of fuel has been put on hold at the Dangote Petroleum Refinery following the facility’s decision to sell fuel in dollars.

Many marketers told The PUNCH on Sunday that the facility was not even loading its trucks, sparking fear of possible fuel tightness across the country. But the refinery denied the claim, arguing that fuel loading was ongoing within the Lekki-based plant.

Petroleum marketers said they suspended large-scale fuel loading in the last few days as they await clarity on the new pricing template being adopted by the refinery. They also await the cost of newly imported petroleum products.

The development heightened uncertainty in the downstream petroleum sector, with marketers wary of buying large volumes of petrol at the prevailing prices only to see the cost of the product fall shortly after.

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The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, in a telephone interview on Sunday, said marketers were being forced to adopt a cautious approach because of the uncertainty surrounding the next price of petrol.

“The issue is simple; marketers are not buying because they are trying to look at the market dynamics. Whatever we are using today is existing products in tank farms, which we are buying around N1,250 and N1,300,” Ukadike said.

He said the uncertainty had been worsened by the expected arrival of new crude supplies and imported petrol, whose pricing templates remained unclear.

“The problem we are now facing is that this new crude oil that they are bringing- what will be the template? Also, those who have brought in petroleum products and are given licences are also estimated to place their price at N1,350, which marketers are also wary of,” he stated.

Ukadike said marketers were therefore reluctant to load large volumes because they could not predict whether the price of petrol would rise or fall after they had purchased the product.

“So everyone is just sceptical about loading products because when you load, you don’t know the next price, if it is going to reduce or go higher. You are still expected by consumers to sell at the prevailing price,” he said.

According to him, the uncertainty has not completely halted the distribution of petrol, but has significantly reduced the volume being loaded by marketers.

He urged the Federal Government to intervene and resolve the dispute over the pricing template, warning that continued uncertainty could further disrupt the downstream market. “The Federal Government has to look inward and resolve this issue once and for all. This template issue should be resolved immediately,” Ukadike said.

In a report by NAN, marketers in the South-West confirmed that the uncertainty over petrol prices has forced many to halt fresh purchases, leading to the temporary closure of some filling stations.

The Zonal Chairman of IPMAN, Western Zone, Oyewole Akanni, disclosed this in an interview with the News Agency of Nigeria on Sunday in Ibadan. Akanni said the situation was triggered by the suspension of loading of Premium Motor Spirit at the Dangote refinery about four days ago.

He said the development had forced marketers to source products from private depots at significantly higher prices. According to him, the cheapest ex-depot price at private depots in Lagos currently ranges between N1,200 and N1,220 per litre, excluding transportation costs.

He added that marketers who bought products on Friday paid between N1,210 and N1,220 per litre. “The non-availability of fuel at some filling stations and the closure of others are due to fluctuations in the price of lifting fuel from depots.

“Since the Dangote refinery stopped selling PMS about four days ago, private depot owners have increased their prices. Many filling stations that have exhausted their stock are waiting to see whether prices will come down when the Dangote refinery resumes sales or increase further. Only a few marketers are buying products for now because of the uncertainty,” he said.

Akanni, however, maintained that there was no fuel scarcity, urging motorists and other consumers not to engage in panic buying. “There is no fuel scarcity. Members of the public should not panic. Although there is a possibility of an increase in the pump price if the current situation persists,” he said.

The zonal chairman said the Dangote refinery neither gave prior notice nor explained the reason for the suspension of PMS sales to marketers. Akanni said four truckloads of petrol meant for his filling stations had remained at the refinery since the suspension of loading.

“I was supposed to have received four truckloads of PMS four days ago, but that has not happened because the trucks are at the Dangote refinery, which has not been selling. The company is not even loading its own trucks. They are all parked there,” he said.

The IPMAN chief said the Nigerian National Petroleum Company Limited was also affected because it sourced products from the Dangote Refinery. According to him, private depots are now selling PMS for as much as N1,250 per litre, while marketers can obtain products from NIPCO and Aiteo at about N1,200 per litre.

“The major issue now is the fluctuation in depot prices, which has created uncertainty in the market,” Akanni said.

Official denies claim

However, a spokesman for the Dangote Group dismissed the report as “fake news”, accusing some marketers of spreading false information. The spokesman told one of our correspondents that the refinery had not stopped loading petroleum products.

“The refinery is loading. Anybody can go there to check. That’s fake news to say we are not loading,” the official, who pleaded not to have his name in print due to the sensitive nature of the matter, stated.

He noted that marketers importing petrol were finding it difficult to compete because prices in Lomé, Togo, had risen, making it increasingly difficult to match Dangote’s prices.

FG vs Dangote

The Federal Government and the Dangote Petroleum Refinery have yet to reach an agreement on the issues that prompted the refinery to adopt a dollar-based pricing template, a development that could prolong uncertainty in the downstream petroleum sector and lead to a further increase in the price of Premium Motor Spirit, also known as petrol.

A senior government official involved in the ongoing discussions revealed on Sunday. The PUNCH gathered that the ongoing standoff is caused by the Dangote Petroleum Refinery grievance on the continued issuance of import licences to marketers and a row on the modalities of crude oil supply.

The official, who spoke on condition of anonymity because of the sensitivity of the negotiations, said the dispute had gone beyond the price of petrol, stressing that it was also linked to the volume of crude supplied to the refinery and the proportion of crude sold to it in naira.

According to the official, the refinery has been unhappy with the Federal Government over the continued issuance of import licences to some oil marketers despite its ability to refine large volumes of petrol for the domestic market.

The official said Dangote was also dissatisfied with the volume of crude supplied to the refinery by the Nigerian National Petroleum Company Limited, as well as the relatively small proportion of the crude purchased in naira.

“So the issue is that Dangote is unhappy about two things; one is that the government gave import permits. They issued import permits to some companies while his refinery is capable. So he was already angry on that level.

“Then number two is that the refinery is saying that it is not getting enough crude oil even from the Nigerian National Petroleum Company Limited. The percentage of naira for crude that they are giving to the facility is not a lot.

“Number one is that the facility is still not getting enough, according to him. And number two is that the portion they are selling to him in naira is still a little. So he still has to do most purchases in dollars. So the facility is saying that if the government cannot increase the crude they are giving to him in naira, the new dollar pricing template is what he will do. So those are the two issues.”

This movement has raised fresh concerns over the stability of petrol prices, with the refinery’s decision to price its products in dollars potentially exposing domestic fuel prices to movements in the foreign exchange market.

Already, this uncertainty over petrol prices has forced many marketers to halt fresh purchases, leading to the temporary closure of some filling stations, according to the Independent Petroleum Marketers Association of Nigeria.

The official said the Federal Government had continued to engage the refinery’s management in a bid to prevent the dispute from escalating. He, however, warned that the government could not allow any single player to hold the country to ransom by demanding restrictions on imports while the parties continued to disagree over crude supply and pricing.

“The government has been discussing this matter. He said he was going to do this (dollar sale of fuel). He said this two weeks ago. And the government was asking for patience. Let us keep engaging now. So now that the new dollar pricing template has been done, the government will still keep engaging,” the official said.

The official also argued that the Dangote refinery’s location within a free trade zone gave it considerable flexibility in determining how it conducted its commercial operations, including the currency in which it sold its products.

“Unfortunately, the facility is in a free trade zone, so the refinery is actually allowed to sell in any currency it wants to sell. The refinery is in a free trade zone. And there are so many taxes not paid,” he said.

“Yes, the refinery still pays, but there are a lot of taxes the refinery is excluded from, because it is in a free trade zone. Those are the benefits you get when you are in a free trade zone.”

FCCPC rejects dollar

However, the Federal Competition and Consumer Protection Commission has said the naira remains Nigeria’s only lawful currency for domestic commercial transactions, amid reports that the Dangote Petroleum Refinery is considering pricing petroleum products in US dollars.

The Director of Corporate Affairs, FCCPC, Ondaje Ijagwu, stated this in a response to enquiries on Sunday. On the reported proposal to price petroleum products in dollars, Ijagwu said, “The commission’s position is clear. The Nigerian naira is the legal tender in Nigeria and remains the lawful currency for domestic commercial transactions.”

On what would be the government’s next step if an agreement is not reached, the top official said, “If there is no agreement and he does not want to listen, the next step will be to allow more imports to come in. It is not possible to hold anybody to ransom

“Cement remains a good case study. The government banned cement importation. Has the cement price gone down? No. This is clear. So, why will he bring it down? He already controls the market. He’s not going to bring it down. So, that’s it.”

The official said Nigeria had imported petrol for decades and could continue to do so if necessary to guarantee adequate supply and prevent a monopoly in the downstream market. “This country has been importing petrol for over 35 years. The world did not stop,” he said.

The warning comes amid a legal challenge by three major oil marketers, Matrix Energy Group, AA Rano Nigeria and AYM Shafa Holdings, over the continued issuance and renewal of licences for the importation of petroleum products.

According to a report by African Intelligence, the companies are seeking an order of the Federal High Court in Abuja directing the Nigerian Midstream and Downstream Petroleum Regulatory Authority to continue granting, issuing, extending, renewing or re-issuing licences, permits and authorisations for midstream and downstream operations relating to petroleum product imports.

The marketers argued that they had invested billions of dollars in storage, logistics, and distribution infrastructure and had played a major role in supplying petroleum products to Nigerians for decades.

Their legal action has further complicated the Federal Government’s attempt to balance the protection of domestic refining.

The government official said the legal action was significant because the government could not simply prevent marketers from importing products if domestic supply was insufficient or if the courts ordered regulators to continue issuing the relevant licences.

“Already, some people have gone to court to try to stop the government from banning the importation of petrol. I hope you are aware. So, in case the government wants to bend to Dangote’s will, some marketers have gone to court to get a court order banning the government from stopping imports,” he said.

The official added that the government could not simply sell all crude to domestic refiners in naira without considering the foreign exchange implications.

“So this is the issue. What’s our main source of foreign exchange? It’s still crude. And where is it coming from? Royalty and crude sales. So NNPC is the one that is bringing in these things. So if they then sell everything in naira, where is the dollar going to come from to do other things?” he asked.

The official said the refinery had previously been receiving a significant portion of its crude supply in naira, although the government had to balance the arrangement against its own foreign exchange requirements.

“The last time it was checked, the refinery was getting at least 35 per cent to 40 per cent of its crude in naira of what was being sold to him. Because where will the country then get the dollar from if everything is sold in dollars?” he said.

The official said the Federal Government’s attempt to prevent the refinery from adopting a dollar-based pricing model had therefore not fully resolved the underlying dispute.

“At the end of the day, what the government was trying to avoid is still the same thing that has happened. He had been threatening before it was done, but engagement continues,” he said.

Speaking further, the FCCPC also expressed concern that the recent decline in international crude oil prices had not been reflected proportionately in the prices of petrol sold to consumers.

According to the FCCPC director, “The FCCPC remains concerned that recent declines in international crude oil prices have not been reflected proportionately in retail petrol prices. As the commission stated in its 28 June public statement, pump prices increased rapidly when crude oil prices rose, yet the subsequent decline in international crude oil prices has not translated into corresponding reductions for consumers.”

Ijagwu said the commission’s concerns had prompted the Federal Government to convene a stakeholders’ meeting involving regulators, refiners, marketers and other participants in the petroleum industry.

Ijagwu added, “The commission stands by this position and expects that, within a reasonable period, the benefits of lower international crude oil prices will be reflected in corresponding reductions in pump prices where market conditions justify such adjustments. (The PUNCH, but headline rejigged)

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