The Independent Petroleum Marketers Association of Nigeria (IPMAN) has said that the price of petrol will determine whether it will purchase from the Nigerian National Petroleum Company (NNPC) Limited or Dangote Petroleum Refinery.
According to IPMAN’s national publicity secretary, Ukadike Chinedu, during an interview with Punch on Monday, the association is ready to buy from either Dangote or NNPC subject to the prices they offer.
He said that the NNPC’s recent clarification that it is not the only off-taker of Dangote products gives dealers the liberty to get their products from any cheaper source.
“Now that NNPC has said they are not the sole off-taker of Dangote petrol, it then means that the price of the product would determine where we are going to buy it. If NNPC imports the product and its price is cheaper than that of Dangote, we will buy from NNPC,” Chinedu said.
Chinedu also said that the situation shows the implementation of the Petroleum Industry Act (PIA) and the government’s removal of petrol subsidy, with the pricing of petrol now determined by the principles of demand and supply.
The IPMAN national publicity secretary added that this competition will in the long run drive down prices.
Speaking on whether marketers had commenced making plans to import if the imported product is cheaper, he said Abubakar Maigandi, IPMAN’s national president, has started dialogue with investors, with plans ongoing to secure funding based on the current market trends.
“So, we are talking with some foreign partners because you need to understand that independent marketers are the highest buyers of diesel from Dangote refinery because we control about 80 percent of the filling stations nationwide,” he added.
“So, if Dangote PMS is cheaper we will buy it, but if importation is cheaper, we will go for it.”
Furthermore, Mustapha Zarma, national operations controller of IPMAN, Mustapha Zarma said that while the association has not yet reached out to the Dangote refinery’s sales department on the price, it plans to do so soon.
He disclosed that the decision to buy from either Dangote or NNPC would be dependent on which supplier offers a better return on investment and required margins.
“We may contact the refinery’s sales department this week to find out the price,” Zarma said.
“If the price is competitive enough for one to buy and get his return on investment and the required margin, then we wouldn’t mind purchasing directly from him to complement what NNPC is bringing in or what NNPC would buy from Dangote.
“I believe that we are going to analyse the price of Dangote petrol and see the advantages of buying from Dangote viz-a-viz importation. Whichever we feel is cheaper will automatically attract everybody, especially if importation is cheaper.”
Zarma emphasized that competition would help avoid price monopoly, with the market determining local prices for refined petroleum products.
“That will bring about competition and I don’t think the government will allow price monopoly. They would want a competitive market where the laws of demand and supply would determine the local price of refined petroleum products, just like diesel is right now,” he said.
“And with that, there is going to be some kind of equilibrium in the pricing and there is going to be guaranteed sustainability of supply.”
On September 7, NNPC denied reports that it plans to become Dangote refinery’s only distributor.
It also said there is no assurance that domestic refining would engender lower prices compared to global parity pricing.
The company also said that Dangote refinery and any other domestic refinery are free to sell their product directly to any marketer on a willing buyer, willing seller basis, which is the current practice for all fully deregulated products.