The unending imbroglio between the Dangote refinery and the Nigerian National Petroleum Company Limited took a dramatic turn recently with insinuations that it is cheaper to import Premium Motor Spirit (PMS) into the country. According to Yakubu Suleiman, the National Assistant Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), buying petrol is cheaper when they import than buying from Dangote Refinery. He stated that “Dangote’s price is higher than other places. Dangote sells at N995/litre and you have to bring your cargo to load.”
This medium undertook a comprehensive analysis of the dynamics in the PMS regime using various variables that determine the pricing and quality of PMS in Nigeria. The findings from the report indicated that the oil and gas sector in Nigeria is undergoing a phase occasioned by the entry of Dangote refinery into the market.
Energy experts consulted were of the opinion that it was unrealistic for imported PMS to be cheaper than a locally refined PMS. They cited the escalating dollar rates and the attendant landing cost associated with the importation regime.
According to findings, it costs $650,000 to $800,000 for freighting 30kt cargo from Europe to West Africa. NPA and NIMASA charge an average of $350,000 for each cargo, aside from other related costs. The implication is that all of these charges are eliminated when PMS is produced locally, as in the case of Dangote refinery.
It was also revealed that Dangote Refinery sells PMS 11 naira cheaper than what is imported into the country. This was confirmed by industry stakeholders who preferred anonymity. They also cited the quality of PMS as a factor in determining the retail price.
“Dangote PMS is of international standard, meeting the requirement in terms of Sulphur content, and that means that there would be less emission and improved engine performance as compared to what is imported into the country. The sad tale is that the regulatory agencies have been derelict in their functions and as such all manner of substandard PMS have been imported into the country, causing untold hardship on vehicle owners”
“The NNPCL in most instances imports blended PMS that does not meet regulatory standards, and it is also bought cheap, and with a higher profit margin when sold to motorists. The quality of PMS imported into the country is sourced from regions in Europe with high Sulphur content in the refining process. This cannot be said of the Dangote refinery because it is a new refinery and the process of refining undergoes strict adherence to the specified average Sulphur content per litre.”
Another source conversant in the refining of PMS stated that the entry of the Dangote refinery into the market was not good business for the NNPCL and the independent marketers.
“Buying from the Dangote refinery eliminates several bottlenecks and associated costs. These are areas where independent marketers make humongous profits. These marketers are not interested in the quality of the PMS they sell. They are out to maximize profit and that has been the regime.”
“ The challenge independent marketers have with buying from Dangote refinery is that there is a limit to the profit margin, which is not good for business for them, and as such, they prefer to continue to importation regime, where they buy very cheap adulterated products and add all the profits and pass down to the end users.”
It was also gathered that should Dangote refinery reduce the quality of its PMS to the standard imported and at the same price sourced from Europe, the independent marketers would patronize it. But this has not been the case and is a reason for the unending imbroglio between Dangote refinery, the NNPCL and independent marketers.
According to a top staffer of the NNPCL, the reason why NNPCL is at loggerheads with the Dangote refinery is the attempt to bring down the price of PMS in the country.
“The government refineries have been moribund for years and it is deliberate. The NNPCL’s major source of income is the importation of PMS, and if our local refineries work, the NNPC would go out of business as such the coming of the Dangote refinery is not good business for the revenue base of the NNPCL, hence the unending drama.”
“The only way the NNPCL can convince Nigerians about its sincerity of purpose is to make our local refineries work, despite the huge amount of monies expended over the years. The argument that imported PMS is cheaper than locally produced is indicative of the rot in the system, and why despite the presence of Dangote refinery, the quest for importation is still rife. In truth, we don’t have any business importing PMS into the country.”
“Of course, Dangote PMS is cheaper and of better quality, but it is not good business for the NNPCL and the independent marketers. This is what they don’t want Nigerians to know. At the end of the day, the end users are bearing the brunt of the actions of the NNPCL and independent marketers.”
