Operators within Nigeria’s downstream oil sector have called on the Federal Government to ensure the provision of crude oil to the Dangote Petroleum Refinery. This plea comes as marketers increasingly opt for cheaper imported refined petroleum products rather than those from the Dangote refinery, citing cost concerns.
Industry leaders have criticised international oil companies (IOCs) operating in Nigeria for selling crude to the Dangote refinery at prices above the global market rate, labeling this practice as “anti-country.”
The Independent Petroleum Marketers Association of Nigeria (IPMAN) explained that the primary reason for the preference for imported diesel and aviation fuel is the higher cost of products from the Dangote refinery. Abubakar Maigandi, IPMAN’s National President, highlighted that the refusal of Aliko Dangote, President of the Dangote Group, to collaborate with IPMAN is adversely affecting the $20 billion refinery.
Reports noted that Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited, accused IOCs of intentionally attempting to undermine the refinery’s success. Edwin claimed that while the Federal Government issued 25 refinery construction licences, only the Dangote Group fulfilled its commitment. Despite exporting over 3.5 billion litres of refined products to Europe and other markets, the refinery struggles domestically due to high production costs.
Maigandi criticised Dangote’s pricing strategy, stating, “The major challenge is the cost of the Dangote diesel. We are looking for a reduction from him. He should bring it to a little bit lower rate. If his price were lower, there would be no reason for marketers to import fuel.”
Edwin had accused the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) of issuing licences that allowed the importation of substandard fuels, posing health risks to Nigerians and economic challenges to the refinery. The NMDPRA has yet to respond to these allegations.
Maigandi further lamented Dangote’s refusal to engage independent petroleum marketers, suggesting that direct sales to these marketers would stabilise the market and reduce prices. Instead, Dangote relies on multinational companies, which Maigandi claims are undermining the refinery’s efforts.
A Dangote Group official, speaking anonymously, attributed the high diesel prices to the necessity of importing crude oil from the United States, a practice driven by the refusal of IOCs to sell locally. This reliance on imported crude, priced in dollars, inflates production costs.
The IPMAN president stressed that local crude sourcing would reduce costs significantly. “If the Federal Government allows us to buy in Nigeria, it will be cheaper. What we need to do is just to refine and sell,” the official stated.
Aliko Dangote recently noted that the refinery had lowered diesel prices in Nigeria from approximately N1,600 per litre to N1,000, although current prices remain around N1,200, which marketers still consider too high.
Oil marketers have urged the Federal Government to mandate that IOCs supply crude to the Dangote refinery at competitive rates, warning against practices that inflate costs by about $6 per barrel above the market rate.
Billy Gillis-Harry, President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), described the IOCs’ pricing as “anti-country,” and called for new business engagement rules in Nigeria. IPMAN’s Public Relations Officer, Chief Ukadike Chinedu, echoed this sentiment, emphasising the need for government intervention to ensure fair pricing.
The ongoing disputes highlight the complex challenges facing Nigeria’s oil sector, where regulatory practices, pricing strategies, and international market dynamics intersect, affecting both local production capabilities and economic stability.
