The Nigerian National Petroleum Company (NNPC) Limited has explained the difficulties oil marketers face in buying and importing petrol from Dangote Refinery, as reported by The Sun.
According to Adedapo Segun, the Executive Vice-President of NNPC’s downstream sector, the challenge lies in the profitability and cost-effectiveness of such transactions.
Segun addressed the press, clarifying that despite the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) approving import permits for various petroleum products, marketers often find importing petrol from Dangote Refinery unprofitable.
He noted that while marketers receive approval to import automotive gas oil (AGO), aviation turbine kerosene (ATK), and occasionally petrol motor spirit (PMS), they tend to focus on importing only AGO and ATK.
Segun explained that marketers assess the market conditions and find that PMS is still sold below cost. As a result, they conclude that importing petrol would lead to financial losses. This market assessment leads them to prioritize importing products that offer better profit margins.
He said: “When the marketers go to NNPC to get the permit or licence to get the import, typically they will say they want to import x amount of automotive gas oil (AGO), aviation turbine kerosene (ATK), and some of them actually include petroleum motor spirit (PMS).
“They then go to market, check the market indices and say to themselves: PMS is still being sold below cost; if I bring it in, I’ll make a loss. Now they have approval to bring in ATK, AGO, and PMS, but they end up bringing only AGO and ATK.
“They do not bring in that PMS because the market is still not right for them. So, it is not because NNPC wants to be the sole importer or provider of PMS, it is because the other marketers won’t do it if it’s not profitable.”