PETROL PUMP PRICE MAY DROP AS DANGOTE, MARKETERS INK AGREEMENT
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Dangote Petroleum Refinery and the Independent Petroleum Marketers Association of Nigeria have reached an agreement for direct product lifting.
The group claims that doing this will guarantee that petroleum is available to Nigerians at a lower cost.
Abubakar Garima, the National President of IPMAN, made this announcement at a news conference in Abuja on Monday after the association’s National Working Committee meeting.
He clarified that IPMAN was required by the Dangote refinery to lift PMS, AGO, and DPK directly in order to forward the supplies to IPMAN depots and retail locations. A consistent and uninterrupted supply of PMS products at a reasonable price would be guaranteed throughout Nigeria thanks to this new agreement with the Dangote refinery.
He said, “Following our recent meeting with Alhaji Aliko Dangote and members of his top management staff in Lagos, we are happy to state the following; Dangote Refinery has obliged IPMAN to lift PMS, AGO and DPK directly for onward supply to IPMAN depots and retail outlets. That this new arrangement with the Dangote refinery will ensure a steady and ceaseless supply of PMS products all over Nigeria, at an affordable rate for Nigerians also.”
Aliko Dangote, the founder of Dangote Industries Limited, stated on October 29 that the refinery had more over 500 million liters of gasoline, but he also mentioned that oil merchants were not purchasing his goods.
IPMAN countered that its members had been unable to use the Dangote refinery to load gasoline for days. The refinery said it has not received any payment from the IPMAN for refined petroleum products, while Garima stated the organization paid N40 billion to the Nigerian National Petroleum Company Limited but is still unable to source the goods.
Garima continued the briefing by urging IPMAN members to back Dangote Refinery, pointing to the advantages of backward integration and the favorable effects on Nigeria’s foreign exchange market.
Garima said he was certain that talks with Dangote would result in cheaper prices.
“All IPMAN members should fully support the Dangote refinery, as it’s the ideal thing to do considering the monumental benefits of backward integration and the medium to long-term impact it will have on the Foreign Exchange markets in Nigeria.
“IPMAN members nationwide should rely on the Dangote refinery and Nigerian rfineries for their white products, as this will translate into ensuring more job opportunities in Nigeria, as well as signify total support for President Bola Tinubu’s Renewed Hope Agenda,” he added.
Commenting, an Energy expert Kelvin Emmanuel, said the new agreement would eliminate financing and margin costs incurred by the NNPCL.
He said, “What is cheery about this news is that NNPC’s letter of credit as financing cost ($28 per metric tonne) that is passed to IPMAN — controlling 30,000 retail stations and their margin ($26.48 per metric tonne) will be removed.”
The president of IPMAN added that the group is actively negotiating with the presidential CNG initiative and is getting ready for a seamless rollout of CNG refill stations around the country.
“On CNG, I would also like to call on all our members at IPMAN to begin to put all types of machinery in place for a successful transition of the Federal Government’s plans to initiate CNG refill stations in all our outlets. Truly there is no doubt that CNG has the potential to rejuvenate our economy for a better life for Nigerians, and IPMAN is ready to give her all to support the CNG initiative.
“IPMAN is also calling for a partnership with the Federal Government of Nigeria to hasten the quick success of the CNG initiative for Nigeria. We believe that for the CNG initiative to succeed there must be a credible partnership between IPMAN and the PCNGI, without which Nigerians would not have ready and near access to CNG outlets.”
It is anticipated that this collaboration between Dangote and IPMAN will boost Nigeria’s petroleum sector’s productivity, affordability, and economic expansion. It is anticipated that this action will cut expenses, remove intermediaries, and guarantee a consistent supply.
The Dangote Refinery said early this year that it will provide fuel to roughly 150,000 retail locations run by oil marketers.
Aminu Abdukadir, the head of the association’s Board of Trustees, stated in his speech that IPMAN must continue to be dedicated to supplying the retail stations and funding necessary to guarantee that goods are delivered to customers.
“The business of making money without doing anything is over with the deregulation of the sector. For IPMAN to survive, it must provide the filling stations, the money, the trucks, to provide this commodity to motorists,” he said.
Meanwhile, the Executive Secretary of the Major Energy Marketers Association of Nigeria, Clement Isong, has explained that the final landing price is determined by several key factors, including the exchange rate, logistics efficiency and cost negotiating power based on volume bought.
In a conversation with our correspondent on Monday, the ES stated this in reaction to the anticipation of a drop in gas prices after landing costs dropped by 20.34% to N971.57 per liter.
He pointed out that rather than basing their prices on the daily spot price, oil marketers base their prices on the average cost of importing gasoline over a 30-day period.
Isong said, “If you read our bulletin, there is not one landing price for the whole country. What we are saying is to give an idea of the landing pricIf if you land 38,000 metric tonnes into ASBM in Apapa, this is the landing price. That’s what we are saying. If you land 100,000 MT, or 80,000 MT into Pinnacle, the landing price will be lower. But there are only two places where the landing price will be lower due to economies of scale. If you land in the majority of the country, the depots and facilities take less. So, if you land it into another place in Lagos, the landing price will be higher. It won’t be N971 per litre. It can be as close to N1,000.
“So, the landing price is in function of how much you got your exchange rate, logistics and your negotiating power based on what volume bought. Some marketers are landing below N917. But the vast majority of people who don’t enjoy the benefits of economies of scale will land at significantly above that. What this teaches is that it is a free and open market. It’s how you buy that you sell. There is no one price. It is a function of the draft of the vessels that you land the product. It’s a function of how much product was bought. It’s a function of what rate of exchange was used to buy products. The exchange rate that we have used is the central bank rate. So, if you have the central bank rate, then you will not land at that price but if you to the black market, the price will be higher.
“The law says that we can only keep 30 days of stock in our depots. So, the fact that the spot market has gone up means nothing, because you are selling based on the price of the average cost in your tank. The fact that the price has gone down to N971, it doesn’t matter, because we are selling based on the average cost in your tank. How much did you buy and the average cost of everything in the tank? It’s a market price. And the market price is a range. It moves, depending on how efficient you are. And I think for us, the most important thing is the exchange rate.”
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