…reveals how marketers exploit Nigerians
Petroleum marketers operating in the nation’s downstream petroleum sector are currently afraid of losing the power to arbitrarily fixing the pump price of Petroleum Premium Spirit (PMS), a practice they have sustained for decades, News Direct can reveal.
The marketers’ fear is borne out of the recent attacks on them by Dangote Industries Limited (DIL), especially the decision to go public with the ex-depot price of Petroleum Premium Spirit (PMS) produced by its 650,000 barrels a day plant located in Ibeju-Lekki, Lagos. With the veil on the opaque and secretive fuel purchase regime perpetrated by the Nigerian National Petroleum Corporation Limited (NNPCL) and fuel marketers finally broken by Dangote, Nigerians now have an idea of what it cost the national oil company and marketers to either bring in refined petroleum products from abroad or buy locally from Dangote Refinery, with the period when marketers can make huge margins from refined products sold in their stations expected to come to an end soon, energy experts warned.
It would be recalled that the usually calm and reticent Kano-born billionaire recently came out of his shell to launch tirades on regulators of the oil and gas sector, local and international oil producers, as well as petroleum products marketers.
In the latest attack on Sunday, November 3, 2024, while reacting to a claim by marketers that the refinery’s prices are higher than other suppliers, making it difficult for independent marketers to buy from it, Dangote Refinery claimed its prices are benchmarked against international rates, ensuring competitiveness, alleging that any marketer importing petrol at lower prices brings in substandard products, posing health and environmental risks.
“We had lately refrained from engaging in media fights but we are constrained to respond to the recent misinformation being circulated by IPMAN, PETROAN, and other associations.
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“Both organisations claim that they can import PMS at lower prices than what is being sold by the Dangote Refinery.
“We benchmark our prices against international prices and we believe our prices are competitive relative to the price of imports.
“Post deregulation, NNPC set the pace by selling PMS to domestic marketers at N971 per litre for sale into ships and at N990 for sale into trucks.
“This set the benchmark for our pricing and we have even gone lower to sell at N960 per litre for sale into ships while maintaining N990 per litre for sale into trucks.
“In good faith, and in the interest of the country, we commenced sales at these prices without clarity on the exchange rate that we will use to pay for the crude purchased.
“We should point out that it is not unusual for countries to protect their domestic industries in order to provide jobs and grow the economy.
“For example, the U.S and Europe have had to impose high tariffs on EVs (electric vehicles) and microchips in order to protect their domestic industries.
“While we continue with our determination to provide affordable, good quality, domestically refined petroleum products in Nigeria, we call on the public to disregard the deliberate disinformation being circulated by agents of people, who prefer for us to continue to export jobs and import poverty”, said the Dangote Group’s Chief Branding and Communications Officer, Tony Chiejina.
The Dangote Group also frontally attacked Pinnacle Oil Limited, an Indian multinational company, of hiring a depot facility next to its plant in Ibeju-Lekki with the objective of using it to blend substandard products that will be dumped into the market to compete with its (Dangote’s) higher quality production.
While lambasting Pinnacle Oil and Gas CEO, Robert Dickerman, for his warped interpretation of deregulation, Dangote Group maintained that deregulation should not be used as justification to import substandard products.
“The Dangote Petroleum Refinery and Petrochemicals Company has long been an advocate of deregulation and industrialization in Nigeria, but our support is rooted in a commitment to the sustainable growth of the country’s economy and the protection of its people from any exploitation.
“Unlike Dickerman’s view, deregulation should not be a licence for the importation and distribution of off-spec products or subversion of national interests.
“So? It is perplexing that despite his experience in the U.S. market, Dickerman is advocating the importation and blending of petroleum products to Nigeria under the claim of deregulation and a free market”, Chiejina stated.
Meanwhile, BH reliably gathered that Dangote Refinery’s eventual release of its ex-depot price of PMS to NNPCL and marketers has sent jitters down the spine of petroleum marketers and officials of the national oil company, who had operated an opaque fuel pricing system for years.
Based on BH’s breakdown of its price template of N960 per litre for sale into ships and N990 per litre for sale into trucks, marketers add their own margins of between N65 and N240 from a litre of petrol purchased from Dangote Refinery.
According to BH findings, while NNPC Retail, a retail arm of NNPC, gets petrol from Dangote Refinery at N960 per litre, it sells to motorists in Lagos at N1,025, a marked up figure of N65.
Meanwhile, NNPC Retail outlets outside Lagos State sell to buyers at a price of between N1,050 and N1,070, a difference of N90 to N110 revenue.
Likewise, major fuel marketers like 11 Plc (Mobil), TotalEnergies, MRS, Conoil, Ardova, AA Rano, Techno Oil, Heyden, BOVAS, NIPCO, Rainoil, Matrix, Northwest, Emadeb, Ashrami, Pinnacle and others have their pump price set at between N1,050 and N1,070 in Lagos, with the product going for N1,100 and N1,130 in other states. Thus raking in N90 to N170 revenue before expenses are removed.
On the other hand, independent marketers, who account for about 75% of the filling stations scattered across the country and a product share of 25%, sell to Nigerians at the rate of N1,100 to N1,300, depending on their location.
Speaking on the development, an oil and gas expert, Chinyere Orji, said the revenue marketers earn from every litre of petrol is scandalous, insisting that the refiner does not earn that much.
“How can a marketer earn N50 and above on a litre of petrol? If you multiply N50 by the content of a 33,000 litres tanker, that gives you N1.650 million.
“That is outrageous. And you know what, some marketers make more than that in actual profit. Before, they blamed the NNPC and Dangote Refinery for the high cost of petrol. But with the recent revelation by Dangote, we now know, who the culprits are”, Orji stated.
Sources in Dangote Refinery, who spoke on the condition of anonymity informed our correspondent that even the refinery is truly not earning up to the margin marketers put on the product.
“The real profit (to Dangote Refinery) is between N5 to N10 on a litre of petrol. How we get our income through the large volume produced?
“Our president recently said the refinery has over 500 million litres in its tanks. If you add it up, N5 from 500 million litres will give you N2.5 billion, while N10 from 500 million litres amount to N5 billion”, one of the sources claimed.
Our correspondent learned over the weekend that it will no longer be business as usual for marketers as regulators and government agencies, such as the Federal Competition and Consumer Protection Commission Commission (FCCPC) have started beaming their searchlights on them.
According to a source in the commission, the revelation by Dangote Group really rattled the top hierarchy of the organisation, who have decided to look into it.
“If truly Dangote Refinery is selling fuel at N960 and N990, fuel should be cheaper than the price it is currently been sold, even by NNPC Retail.
“Ideally, since marketers trade in huge volume, their profits should come from the quantity of sales they make, not the other way round.
“We are investigating them and any company found guilty will be sanctioned”, the source stated.
BH also gathered that the prices of petrol at filling stations will soon crash as Dangote Refinery expends the feedstocks he bought at over $80 still in his crude tanks.
“What we are presently paying for is refined products gotten from crude oil purchased about three to six months ago. When those stocks finish, coupled with the attendant effects of the cash for crude policy, we are going to witness an appreciable fall in prices soon”, said Toyosi Gbadamosi, an oil and gas consultant based in Lagos.
