The Nigerian National Petroleum Company Limited (NNPC Ltd) said it will not be the sole off-taker of the Dangote Refinery Limited and will not buy its petrol unless the price is cheaper than what is offered in the international market.
An off take contract is a contract under which a third party (the off-taker) agrees to buy a certain amount of the product produced by a project at an agreed price. The product is often a commodity such as oil, gas, minerals or power.
The spokesman for the NNPC Ltd, Mr Olufemi Soneye said in a statement that it would only fully off take petrol from the refinery if the market prices of PMS were higher than the pump prices in Nigeria.
The oil national oil company also stated that Dangote and other domestic refineries were free to sell directly to any marketer on a willing buyer, willing seller basis, adding that it had no desire or intention to become the distributor for any entity in a free market environment.
The company was reacting to a press release by the Muslim Rights Concern (MURIC) which claimed that the Dangote refinery was being undermined by the NNPC Ltd.
Specifically, MURIC asserted that recent changes to the pump price of petrol would prevent the Dangote Refinery from offering lower prices and that NNPC Ltd “has become the sole off taker of all products from the refinery.”
Reacting, the oil corporation said: “The pricing of petroleum products from any refinery, including the Dangote Refinery Ltd. (DRL), is determined by global market forces. The recent changes in PMS prices have no impact on the DRL or any other domestic refinery’s access to the Nigerian market. In fact, if current prices are perceived as high, it presents an ideal opportunity for the refinery to sell its products at lower prices in the Nigerian market.
“Furthermore, we emphasise that there is no guarantee of lower prices associated with domestic refining compared to any global parity pricing framework, as confirmed by the DRL. The NNPC Ltd will only fully off-take PMS from the DRL if the market prices of PMS are higher than the pump prices in Nigeria. The DRL 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. NNPC Ltd. has no desire or intention to become the distributor for any entity in a free market environment, and therefore, the notion of becoming a sole off-taker does not arise.
“The NNPC Ltd. cannot undermine a business in which it holds a billion-dollar stake.
“As an advocacy group for fair and just treatment, MURIC should have verified the facts before making statements that are entirely flawed and has the potential to incite ordinary Nigerians against the NNPC Ltd.”
