The Nigerian government has approved a major shift in the country’s petroleum supply chain, granting oil marketers permission to directly purchase petrol from the Dangote Refinery. This change, announced in October 2024, marks the end of the Nigerian National Petroleum Corporation’s (NNPC) long-standing monopoly as the sole off-taker of petroleum products from the refinery. The move is expected to create a more competitive and deregulated market, driving efficiency and potentially lowering prices for consumers.
The Dangote Refinery, which has a massive production capacity of 650,000 barrels per day, began operations earlier this year with the goal of meeting Nigeria’s domestic fuel demand. The refinery’s output has been seen as a critical step toward reducing the nation’s dependence on imported petroleum products, but the NNPC had initially retained exclusive rights to distribute its fuel. However, following the government’s directive, marketers can now engage in direct negotiations with the refinery to purchase petrol on commercial terms.
This shift is expected to benefit the Nigerian petroleum market by encouraging competition, improving fuel distribution across the country, and stabilizing supply lines. The Federal Executive Council (FEC) and the Ministry of Finance played key roles in this transition, overseeing the Crude Oil and Refined Products Sales in Naira initiative. The government hopes this will also help reduce the foreign exchange burden by promoting local transactions in naira for crude and refined products.
Despite this positive development, some industry players remain concerned about the refinery’s ability to fully meet Nigeria’s growing fuel demands. As a result, many marketers are preparing to import additional fuel supplies to compensate for any shortfall, ensuring that the country does not experience further fuel scarcity.
