Dangote Refinery has officially commenced the production of premium motor spirit (PMS) or petrol, with the Nigerian National Petroleum Company Limited (NNPC Ltd.) set to be its exclusive buyer.
The refinery, which has a production capacity of 650,000 barrels per day, is nearing the end of its testing phase and is expected to start rolling out petrol in the coming weeks, according to a recent Reuters report.
Devakumar Edwin, Vice President at Dangote Industries Limited, confirmed the progress: “We are testing the product (gasoline) and subsequently it will start flowing into the product tanks. If no one is buying it, we will export it as we have been exporting our aviation jet fuel and diesel,” he said.
NNPC Ltd., which is designated as the supplier of last resort under the Petroleum Industry Act (PIA), is preparing to purchase petrol exclusively from the Dangote Refinery to address local fuel needs.
The national oil company emphasized its commitment to ensuring national energy security and maintaining a consistent supply of petroleum products nationwide. However, the exact date when the petrol will be available on the market has not been specified.
The move comes amid significant challenges for NNPC Ltd., which recently acknowledged owing international oil traders approximately $6 billion in subsidy obligations. This debt has disrupted the fuel supply chain, leading to a shortage as traders halted petrol imports to NNPC due to unpaid obligations.
The announcement that NNPC will exclusively buy petrol from the Dangote Refinery could potentially alleviate the ongoing fuel scarcity that has plagued the nation.
By sourcing petrol domestically, NNPC aims to reduce importation and logistics costs, which could help in lowering fuel prices and improving availability for local marketers.
Furthermore, the Federal Executive Council has approved the sale of crude oil to the Dangote Refinery in local currency, contingent on the refinery’s commitment to sell processed petrol to Nigeria in the same currency.
This arrangement is expected to bolster the refinery’s role in stabilizing Nigeria’s fuel supply and could have a significant impact on the nation’s energy sector.
As Dangote Refinery gears up for full-scale production, it is poised to play a crucial role in not only meeting domestic demand but also in exporting to other African countries, further supporting Nigeria’s position in the regional energy market.