The Independent Petroleum Marketers Association of Nigeria (IPMAN) says the price of petrol will determine if it will buy from the Nigerian National Petroleum Company (NNPC) Limited or Dangote Petroleum Refinery.
According to Ukadike Chinedu, national publicity secretary
of IPMAN, in an interview with Punch on Monday, the association is prepared to
buy from either Dangote or NNPC depending on the prices they offer.
Chinedu said the NNPC’s recent clarification that it is not
the sole off-taker of Dangote products gives dealers the freedom to get their
products from any cheaper source.
“Now that NNPC has said they are not the sole off-taker of
Dangote petrol, it then means that the price of the product would determine
where we are going to buy it. If NNPC imports the product and its price is
cheaper than that of Dangote, we will buy from NNPC,” Chinedu said.
He said the situation reflects the implementation of the
Petroleum Industry Act (PIA) and the government’s removal of petrol subsidy,
with the pricing of petrol now determined by the principles of demand and
supply.
Chinedu said this competition will eventually drive down
prices.
On whether marketers had started making plans to import if
the imported product is more affordable, he said Abubakar Maigandi, IPMAN’s
national president, has initiated discussions with investors, with plans
underway to secure funding based on the current market trends.
“So, we are talking with some foreign partners because you
need to understand that independent marketers are the highest buyers of diesel
from Dangote refinery because we control about 80 percent of the filling
stations nationwide,” he added.
“So, if Dangote PMS is cheaper we will buy it, but if
importation is cheaper, we will go for it.”
Similarly, Mustapha Zarma, national operations controller of
IPMAN, said while the association has not yet contacted the Dangote refinery’s
sales department on the price, it plans to do so soon.
‘DECISION TO BUY FROM NNPC, DANGOTE DEPENDS ON RETURN ON
INVESTMENT’
Zarma said the decision to buy from Dangote or NNPC would be
based on which supplier offers a better return on investment and required
margins.
“We may contact the refinery’s sales department this week to
find out the price,” Zarma said.
“If the price is competitive enough for one to buy and get
his return on investment and the required margin, then we wouldn’t mind
purchasing directly from him to complement what NNPC is bringing in or what
NNPC would buy from Dangote.
“I believe that we are going to analyse the price of Dangote
petrol and see the advantages of buying from Dangote viz-a-viz importation.
Whichever we feel is cheaper will automatically attract everybody, especially
if importation is cheaper.”
He stressed that competition would help prevent price
monopoly, with the market determining local prices for refined petroleum
products.
“That will bring about competition and I don’t think the
government will allow price monopoly. They would want a competitive market
where the laws of demand and supply would determine the local price of refined
petroleum products, just like diesel is right now,” he said.
“And with that, there is going to be some kind of
equilibrium in the pricing and there is going to be guaranteed sustainability
of supply.”
On September 7, NNPC denied reports that it intends to
become Dangote refinery’s sole distributor.
The company also said there is no guarantee domestic
refining would lead to lower prices compared to global parity pricing.
NNPC said Dangote refinery and any other domestic refinery
are free to sell directly to any marketer on a willing buyer, willing seller
basis, which is the current practice for all fully deregulated products.
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