Dangote Refinery: Nigerian Marketers Are Boycotting Our Diesel Despite 60% Discount

Dangote Refinery recently started production of diesel in April 2024.

However, the company claims that it struggles to sell about 29 tankers of diesel per day due to low patronage from Nigerian oil marketers.

Devakumar V.G. Edwin, Vice President of Dangote Group Limited, revealed this during a space discussion on X on Wednesday.

Local marketers boycotting Dangote Refinery Diesel

He disclosed that although the refinery endeavours to provide reasonably priced petroleum products, numerous Nigerian traders have declined to purchase from the refinery, opting to continue importing diesel from overseas.

“The whole purpose of doing this refinery in Nigeria was to utilize our local crude instead of exporting raw materials and importing finished products,” he explained. “We should be able to refine and use the finished products within Nigeria and produce more to export the surplus,”  he stated.

This reveals that marketers purchase only 3% of Dangote Refinery diesel due to its lower pricing.

Foreign markets have access to the remaining 97% due to the ignorance of local marketers.

“I’m selling 2 to 3% to small traders who are willing to buy, while the rest 95 to 97% I’m forced to export,” The vice president spoke on the quantity of the refinery’s products sold locally. Devakumar claims that Dangote Refinery endeavours to sell diesel at N1,000 despite an exchange rate of about N1.600 to the naira while marketers are selling imported diesel for N1,700.

What could this mean? Dangote Refinery and Endless Riddles

Devakumar’s claim is another in a long series of allegations, counter allegations and hard to decode contradictory press statements from Dangote Refinery, Nigerian oil marketers, the Nigerian government and the Nigeria National Petroleum Company Limited (NNPLC). Dangote Refinery announced the commencement of the production of Premium Motor Spirit (PMS), commonly known as petrol, in early September 2024 and announced that the sole off taker or buyer for its petrol would be the NNPCL. Only for the NNPLC to release a counter press statement denying that the state-owned oil company would be sole off-takers for petroleum from the Dangote Refinery.

The NNPLC also made a bizarre “clarification”in its statement that it would buy petroleum from Dangote Refinery only if Dangote’s price is lower than the “pump price in Nigeria”. How could the NNPLC trumpet the deregulation of the market and the transition to a regime of market prices while also expecting Dangote Refinery’s petroleum to be cheaper than “the pump price in Nigeria” i.e a price that is about 50% subsidised?

Devakumar’s claims continue the series of claims, counterclaims, and odd twists and turns. The Vice President of  Dangote Group Limited did not explain why Nigerian oil marketers ,who had accused the Dangote Refinery of wanting to institute a monopoly in the downstream sector, would refuse to buy diesel from a domestic refinery that is 60% cheaper than imported diesel. He had earlier accused the oil marketers of importing “dirty fuels” i.e. diesel with dangerously high sulphur content.

It is unlikely that any “dirty diesel” import would be 60% cheaper, despite shipping costs, than Dangote diesel. International business news media like Bloomberg have reported that diesel exports from Dangote Refinery is displacing diesel imports from Europe in West Africa. It is hence difficult to understand what Devakumar was complaining about. Is the Dangote business so patriotic it prefers earning naira to dollars? Industry watchers and Nigerians hope that Dangote Refinery and the Government/NNPLC will soon put an end to the long-running drama.

A Commercial Explanation of Why Local Marketers are “Boycotting” Dangote Refinery Diesel 

 

 

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