In response to a significant surge in depot fuel prices, oil marketers across Nigeria are actively bidding for bulk purchase agreements (BPAs) from the Dangote Petroleum Refinery, aiming to leverage its bulk-purchase incentives to stabilize fuel costs and supply.
The recent 4.7% hike in ex-depot prices has pushed independent marketers to seek more cost-effective and reliable fuel sourcing options. With the price of petrol at the depot now standing at N950 per litre, up from N909, marketers are looking to the Dangote Refinery’s BPA offer as a beacon of relief. This strategic move by marketers is seen as an attempt to counterbalance the rising costs attributed to global crude oil price increases.
Dangote Refinery, with its capacity to refine 650,000 barrels of crude oil per day, has been a game-changer for Nigeria’s fuel supply landscape since it began operations. The refinery’s bulk-purchase agreement offers a minimum purchase requirement of two million litres at N909 per litre, providing price stability that is currently lacking in the market. This initiative not only benefits marketers but also aims to keep pump prices more consistent for consumers amidst global market fluctuations.
Several oil marketing companies, including Ardova Plc and Heyden Petroleum, have already signed bulk purchase agreements with the refinery, leading to lower pump prices in their stations. This has prompted other marketers to follow suit, with the Independent Petroleum Marketers Association of Nigeria (IPMAN) encouraging its members to band together to meet the refinery’s purchase thresholds.
IPMAN’s National President, Alhaji Garima, has highlighted the benefits of buying directly from Dangote Refinery, stating, “Our members still buy from the Nigerian National Petroleum Company Limited (NNPCL) at N899.50 per litre, but for now, the portal to purchase the product is closed. We are now buying a high volume of petrol through the Dangote/MRS arrangement because it is more affordable.”
The move towards BPAs with Dangote Refinery is seen as a strategic pivot for oil marketers, aiming to ensure supply security and price control in an increasingly volatile market. This development is also reflective of a broader trend where local refining capacity is being utilized to reduce dependency on fuel imports, thereby potentially saving billions in foreign exchange for Nigeria.
As more marketers join the BPA scheme, there’s an expectation that this could lead to a more stable and competitive fuel market, benefiting both the industry and Nigerian consumers. However, the long-term impact on fuel pricing and market dynamics remains to be seen, especially with the global oil market’s unpredictability.
This shift in strategy by oil marketers underscores the significant role that local refineries like Dangote’s can play in shaping national fuel policy and economic stability. As Nigeria moves towards greater self-sufficiency in petroleum products, the actions of these marketers could set a precedent for future engagements between refineries and distributors.
For further insights into the implications of these bulk purchase agreements, industry analysts suggest that this could be a pivotal moment for Nigeria’s energy sector, potentially setting the stage for more transparent and efficient fuel distribution networks.