Dangote Vs. NNPC: Refuting Fuel Price Claims And The Battle For Control In Nigeria’s Oil Sector

On September 15, 2024, the Dangote Refinery officially commenced the sale of petroleum products to the Nigerian National Petroleum Company Limited (NNPCL). This development was supposed to be a milestone for the Nigerian economy, potentially addressing the long-standing issues of energy insufficiency, fuel scarcity, and insecurity that have plagued the nation for over five decades. However, this achievement was marred by a controversial statement from Mr. Olufemi Soneye, a spokesperson for NNPCL, who claimed that Dangote Refinery sold Premium Motor Spirit (PMS) to NNPCL at an exorbitant rate of N898 per litre.

In a swift response, Dangote Group issued a press statement denouncing this claim as “misleading and mischievous.” The refinery argued that this statement was an attempt to undermine its contributions to the Nigerian economy and to disrupt its achievements in energy production. Dangote stressed that its current stock of crude oil was procured in dollars, and any pricing decisions would follow a formal announcement by the Technical Sub-Committee on Naira-based crude sales to local refineries, an initiative appointed by President Bola Ahmed Tinubu and set to take effect from October 1, 2024.

The root of this controversy appears to lie deeper than a mere pricing dispute. The NNPCL, Nigeria’s state-run oil corporation, has long maintained a monopolistic control over the sale and distribution of petroleum products in the country. The fact that NNPCL demands exclusive rights to purchase fuel from Dangote Refinery, without allowing Dangote to sell to independent marketers, raises serious questions about the corporation’s intentions. Why should NNPCL monopolize fuel distribution in a liberalized economy, especially when independent marketers could help ensure broader access to fuel and possibly stabilize prices?

This monopoly seems to shield NNPCL from the benefits of competition, allowing it to dictate prices and terms. The exclusion of other marketers from accessing fuel directly from the Dangote Refinery could mean higher prices for Nigerian consumers, as NNPCL will be the sole distributor, capable of setting prices according to its discretion.

ALSO READ: NNPC Ltd Releases Estimated Pump Prices Of PMS From Dangote Refinery

Such a situation prompts concerns about what NNPCL might be hiding. Are they prioritizing their interests over the economic well-being of Nigerians? More importantly, is there something being concealed from the public about the real dynamics within the petroleum industry?

President Bola Tinubu, who doubles as the Minister of Petroleum, has been conspicuously silent on this issue. Given the strategic importance of the petroleum industry to Nigeria’s economy and the direct impact of fuel prices on the daily lives of citizens, one would expect decisive intervention from the president to address the ongoing issues between Dangote Refinery and NNPCL. However, this silence raises the possibility of deeper, covert relationships between NNPCL leadership and the presidency.

Could it be that the NNPCL leadership is acting with impunity because of tacit support from the highest levels of government? If so, it would explain why the president has not yet addressed the brewing crisis or taken action against NNPCL’s monopolistic tendencies. It would also explain why the corporation is empowered to dictate the terms of its dealings with Dangote Refinery, even when such actions go against the economic interests of the country.

The monopolistic grip of NNPCL on the petroleum industry and its resistance to open competition have far-reaching consequences. Nigeria’s economy has already suffered from recurrent fuel shortages and price hikes, which exacerbate inflation and cripple various sectors. Dangote Refinery’s entry into the market was hailed as a solution to these challenges, but if NNPCL continues to control the distribution process, it is unlikely that Nigerians will feel the full benefit of this new local production capacity.

Could NNPCL’s actions be tantamount to sabotaging the economy? By forcing Dangote to sell exclusively to NNPCL, the corporation maintains a bottleneck in fuel distribution that continues to hurt ordinary Nigerians. If this is not addressed, Nigeria’s dream of local refining capabilities solving the energy crisis might remain unrealized, with the benefits accruing only to a select few.

The Dangote Refinery’s refutation of the N898 per litre claim brings to light the urgent need for transparency and reform in Nigeria’s petroleum sector. As Nigerians wait for the October 1 formal announcement of a new pricing framework, the current scenario underscores the need for the government to address NNPCL’s monopolistic control and ensure that the interests of Nigerian consumers are prioritized. Independent marketers must be allowed access to fuel, and NNPCL’s influence in the sector must be reined in to prevent further economic sabotage.

Moreover, the president’s role as Petroleum Minister requires more active engagement with the issues at hand. If indeed there are covert dealings between NNPCL leadership and the presidency, it is essential for the sake of the country’s economy that these be exposed and addressed. Only through such transparency can Nigeria move toward a more stable, fair, and competitive energy market that benefits all citizens.

Sir Divramredje Lawrence Efeturi, ksji, CIEPUK
(A public affairs commentator writes from Delta State)