Dangote Refinery has insisted on selling its Premium Motor Spirit (PMS), also known as petrol, at ₦766 per litre to the Nigerian National Petroleum Corporation Limited (NNPCL) due to a combination of factors influencing its pricing structure. Key reasons for this price point include:
1. Crude Oil Payments in Naira: Under a special agreement between NNPCL and Dangote Refinery, crude oil is supplied to the refinery in exchange for payments in Naira, reducing reliance on foreign currency. In turn, the refinery supplies PMS and diesel back to NNPCL, which affects pricing, including operational and production costs.
2. Deal Structure Similar to Past Agreements: The agreement between NNPCL and Dangote Refinery is similar to previous Direct Sale of crude oil and Direct Purchase of petroleum products (DSDP) models. These agreements, where crude is exchanged for refined products, aim to streamline supply and stabilize the market.
3. Market Impact: Dangote’s decision to sell at ₦766 per litre offers a cheaper alternative to the current market rate of ₦870 per litre, presenting potential relief for consumers. Independent marketers are keen on accessing Dangote’s fuel directly, rather than through NNPCL, which they fear may create a domestic monopoly.
Overall, Dangote’s pricing strategy balances the economic realities of the refining process, government agreements, and market competition.
