The federal government, in its efforts to wholly deregulate the downstream sector, has said that oil marketers can now buy petroleum products directly from the Dangote refinery and other local producers without going through the Nigerian National Petroleum Company (NNPC) Limited.
Following this announcement in a statement on Friday, the development automatically brings an end to NNPC’s sole distributor role which the national oil firm had held for so many years in Nigeria’s oil industry.
This is also happening amidst eports that the state-owned oil firm had stopped its middleman role to the Dangote refinery.
FG had started the sale of crude oil to local refineries — including the Dangote refinery — in naira on October 1, in attempts to tackle petrol supply challenges caused by NNPC’s financial straits.
In this new setup, the government stated that the Dangote refinery would sell petrol to only the NNPC in the local currency, stressing that interested marketers would have to purchase the product from the national oil firm.
Giving updates on the execution of deal in the statement, the minister of finance, Wale Edun, said the structure established a plan for domestic production.
Edun spoke during the second post-commencement review meeting of the implementation committee on Thursday, targeted at assessing the progress of the naira-based crude oil and refined products sale initiative.
“New Direct Purchase Model: The most significant change under the new regime is that petroleum product marketers can now purchase PMS directly from local refineries,” he said.
“This marks a departure from the previous arrangement where the Nigerian National Petroleum Corporation (NNPCL) served as the sole purchaser and distributor of PMS from the refineries.
“This direct purchasing mechanism allows marketers to negotiate commercial terms directly with the refineries, fostering a more competitive market environment and enabling a smoother supply chain for petroleum products.
“With the commencement of local PMS production, the market is better equipped to support these direct transactions.
“This transition is expected to enhance efficiency in product availability and stabilize market conditions for the benefit of all Nigerians.”
The minister added that the committee is open for questions and discussions pertinent to this change in the market structure.
Edun concluded by asserting that the committee is committed to providing clarity on the new development and will continue to engage with stakeholders to guarantee a smooth transition process.