The Nigerian National Petroleum Company Limited (NNPCL) has responded to claims by the Muslim Rights Concern (MURIC), which accused the state-owned oil company of monopolising petroleum sales from the Dangote Refinery and blocking the refinery’s ability to offer lower prices.
MURIC had expressed concerns that NNPCL’s involvement could prevent the Dangote Refinery from selling Premium Motor Spirit (PMS) at lower prices to Nigerians.
In a press release on September 7, 2024, NNPCL clarified its position, stressing that it does not control the Dangote Refinery’s product pricing and does not act as the sole distributor of petroleum products in Nigeria.
The company reiterated that Nigeria operates in a deregulated oil market, allowing any refinery to sell directly to marketers under a “willing buyer, willing seller” framework.
MURIC, a well-known religious advocacy group, had raised concerns about the impact of recent fuel price hikes on the Dangote Refinery’s ability to lower fuel costs for Nigerians.
In a statement, the group claimed that NNPCL’s exclusive agreement to purchase refined products from the Dangote Refinery could prevent competition and lead to continued high fuel prices, even with the establishment of domestic refineries.
MURIC argued that with NNPCL in control, Nigerians may not benefit from the price reductions that could come from domestic refining of PMS, also known as petrol.
They further questioned whether NNPCL’s role in the downstream petroleum sector might undermine the much-anticipated relief that Nigerians were expecting from the operations of the Dangote Refinery.
In its detailed response, NNPCL firmly dismissed MURIC’s allegations, emphasizing that Nigeria’s oil market is deregulated and open to competition.
It clarified that the pricing of petroleum products, including those from the Dangote Refinery, is determined by global market forces, not by NNPCL.
“NNPCL has no desire or intention to become the sole offtaker for any entity in a free market environment.
“Any domestic refinery, including Dangote Refinery, is free to sell directly to any marketer,” NNPCL said in its statement.
The company added that NNPCL would only offtake products from the Dangote Refinery if the global market price of PMS is higher than the pump price in Nigeria.
This statement suggests that NNPCL does not have a monopoly over petroleum distribution and that Dangote Refinery is free to compete with other suppliers, potentially offering lower prices if it chooses.
NNPCL reassured the public that the oil market remains competitive, giving room for any refinery to sell its products to interested buyers.
NNPCL also addressed the widespread expectation that the Dangote Refinery will automatically bring down fuel prices in Nigeria.
It noted that the assumption that domestic refining would lead to significantly lower prices is not guaranteed, as local pricing is influenced by global oil prices.
“The pricing of petroleum products is driven by global market forces. If prices are considered high, this provides an opportunity for any refinery, including Dangote, to sell at lower prices,” NNPCL explained.
The company further stressed that local refining does not mean prices will drop below global parity.
This clarification comes as a reminder that while the Dangote Refinery is expected to reduce Nigeria’s reliance on imported petroleum products, its prices will still be influenced by international markets.
This means that unless global oil prices fall, Nigerian consumers should not expect a drastic drop in fuel prices solely because of the refinery’s operations.
Another key point in NNPCL’s statement was its assertion that it cannot undermine a business in which it holds a significant financial interest.
NNPCL holds a billion-dollar stake in the Dangote Refinery, which represents a substantial investment in the future of Nigeria’s energy sector.
NNPCL also criticized MURIC for not verifying facts before releasing statements that could mislead the public.
“As an advocacy group for fair and just treatment, MURIC should have verified the facts before making statements that are entirely flawed and have the potential to incite ordinary Nigerians against NNPCL,” the company said.
