Dangote, IPMAN signal 240m litres month-to-month petrol deal

The Dangote Petroleum Refinery has supplied to provide 60 million litres of Premium Motor Spirit, popularly referred to as petrol, to the Impartial Petroleum Entrepreneurs Affiliation of Nigeria weekly, which interprets to 240 million litres month-to-month.

It was gathered from the affiliation that the refinery agreed to provide 60 million litres of PMS to IPMAN members weekly, relying on patronage.

This got here because it was gathered that the $20bn Lekki-based refinery is aiming to lift billions of {dollars} to import crude oil and enhance manufacturing.

Additionally on Sunday, oil sellers acknowledged that petrol costs have been declining following the competitors occasioned by the deregulation of the sector, particularly because the Nigerian Nationwide Petroleum Firm Restricted and different entrepreneurs imported over two billion litres of PMS in 42 days.

In an interview with The PidomNigeria, IPMAN Nationwide Publicity Secretary, Chinedu Ukadike, stated members of the affiliation can elevate any amount of PMS allotted to them by the Dangote refinery, stressing that impartial entrepreneurs have been those distributing nearly all of the gas imported into the nation.

Recall that the affiliation introduced not too long ago that it had signed an settlement with Dangote to elevate PMS instantly from the refinery with no intermediary.

Giving an replace, Ukadike stated, “We’re going to off-take the product in tens of millions of litres. Prior to now, many of the imported merchandise in Nigeria have been distributed by way of IPMAN. So we are able to off-take the merchandise, irrespective of the tens of millions of litres which are produced.”

Requested whether or not there may be an agreed quantity that IPMAN would off-take from Dangote as soon as impartial entrepreneurs begin loading petrol from the plant, the Nationwide Publicity Secretary replied, “We are able to take from 10 million litres and above and Dangote has supplied to provide us over 60 million litres relying on our patronage.

“The 60 million litres is to be given weekly. And we are able to take and distribute it throughout the nation as soon as we begin lifting the product from the refinery.”

On when IPMAN would begin lifting the product, Ukadike acknowledged that this may be made public after each events had concluded discussions on the deal.

He expressed confidence that the direct provide would start earlier than the tip of November.

“We’re finalising discussions. You understand the assembly between IPMAN and the Dangote refinery was held final week and documentation is in course of. So, there are nonetheless just a few items of documentation that we’re doing now. As soon as they’re sorted, we’ll off-take PMS from the plant.

“That is going to occur earlier than the tip of this month. The Dangote Group has assured us that even when we need to begin taking merchandise from immediately, we must always begin,” he added.

Ukadike spoke additional, “IPMAN has gathered its members and now we have developed a Particular Goal Car to off-take the merchandise from the refinery. So, the difficulty of people going to purchase one or two vans has gone. IPMAN is now going to be a significant distributor and our cash might be assured.

“The time has gone when some sellers will inform us they’ve merchandise once they really don’t, and they’ll lock up our cash of their system. So, we’re taking this as a really efficient measure to have the ability to be certain that the distribution worth chain is environment friendly.”

Costs drop

Each IPMAN and main entrepreneurs confirmed that the pump costs of petrol have began decreasing in lots of elements as a result of competitors that the deregulation of the downstream sector has brought on.

The IPMAN spokesman stated the settlement between IPMNAN and Dangote is regularly pushing down the worth of PMS.

“By simply the announcement that IPMAN and Dangote have met and are able to transact enterprise, the costs of merchandise have crashed. You’ll have observed the drop in costs by N10, N15, or so, and this is because of competitors.

“Impartial entrepreneurs are now not shopping for from middlemen. We’re going to be shopping for instantly from the producer. So, the competitors is setting in. I additionally need to inform you that earlier than the tip of this 12 months, the worth won’t be as excessive as what you see now.

“You may see how our assembly with Dangote has considerably eliminated about N10 from the costs of refined petroleum merchandise. It’s a good improvement. We’ve got not even began. Keep in mind I as soon as advised you that costs would drop as soon as IPMAN began lifting from Dangote,” Ukadike acknowledged.

Additionally confirming the drop in costs, a significant oil marketer acknowledged that this was as a result of deregulation of the downstream oil sector.

“Individuals are not noticing that costs are happening, primarily as a result of there are not any large bulletins. Deregulation is in full swing and competitors is the order of the day,” the main oil marketer, who spoke in confidence attributable to lack of authorisation to talk on the matter, acknowledged.

When advised that the price of petrol was nonetheless above N1,000/litre and was N1,070/litre in filling stations operated by his firm, the supplier replied, “Final week it was N1,080 (in some filling stations) if you happen to have been observant.

“Chances are you’ll not see N900; that’s under price. Simply cease anticipating a everlasting fastened worth. It could possibly come down and it could go up.”

Deregulation opens imports

Whereas IPMAN has declared its resolve to patronise the Dangote refinery, some main entrepreneurs and NNPC are going forward with the importation of refined merchandise, although they patronise the plant when needed.

Our correspondent reported on Saturday that inside 42 days, the NNPC and different gamers imported 1.5 million metric tonnes of PMS, 414,018.764 metric tonnes of diesel, and 13,500 metric tonnes of jet gas.

That is price about N3tn or $1.8bn. One metric tonne of PMS is the same as 1,341 litres. This implies 1.5 million metric tonnes represents 2.011 billion litres of petrol.

The PidomNigeria studies that the importation of petroleum merchandise continues even because the Federal Authorities tries to cease it by way of the naira-for-crude take care of Dangote and different native refineries.

The Organisation of Petroleum Exporting International locations stated in a current report that PMS imports into Nigeria surged in October in comparison with September.

The Dangote refinery started the sale of petrol in September, nevertheless it seems this has but to scale back gas imports, particularly with the sector’s full deregulation.

A doc that offered particulars of imported refined merchandise in the course of the evaluation interval confirmed that corporations like Bovas, AA Rano, Matrix, Fatgbems, Deepwater, Raj, T-Time, Rainoil, Prudent, Chisco, Nepal, AYM Shafa, Northwest, Shorelink, and others obtained petrol from completely different vessels in Lagos, Warri, Calabar, and Port Harcourt.

In October, NNPCL and its companions imported a complete of 994,446.438 metric tonnes of PMS, with Lagos receiving 555,121.617 metric tonnes, Warri 281,100 metric tonnes, Port Harcourt 94,224.821 metric tonnes, and Calabar 64,000 metric tonnes.

A complete of 285,518.764 metric tonnes of diesel was additionally imported, with Lagos receiving 162,500 metric tonnes, Warri 58,500 metric tonnes, Port Harcourt 56,018.764 metric tonnes, and Calabar 8,500 metric tonnes.

Between November 1 and November 11; an extra 358,083 metric tonnes of PMS, 112,500 metric tonnes of diesel, and 13,500 metric tonnes of aviation gas have been discharged at Nigerian ports.

N10bn equalisation fund

In the meantime, the impartial entrepreneurs have appealed to the Nigerian Midstream and Downstream Petroleum Regulatory Authority to pay their N10bn Petroleum Equalisation Fund after many failed guarantees.

Just lately, the NMDPRA promised to pay N10bn to IPMAN members throughout a gathering with the Division of State Providers and stakeholders within the downstream sector, together with the Nigerian Nationwide Petroleum Firm Restricted.

In October, the Nationwide Vice President of IPMAN, Hammed Fashola, advised our correspondent that the intervention of the DSS solved lots of the issues going through entrepreneurs.

Fashola additionally confirmed that by way of the intervention, the NMDPRA agreed to pay the affiliation’s excellent N10bn.

Nevertheless, barely a month later, the company has but to satisfy its promise.

Earlier than deregulation, the Petroleum Equalisation Fund was arrange by the Nigerian authorities to reimburse petroleum entrepreneurs for any losses they suffered arising from the sale of petroleum merchandise at uniform costs all through Nigeria. It was a type of subsidy managed by the defunct Petroleum Equalisation Fund Administration Board.

Fashioned in 2021, the NMDPRA encompasses a merger of three defunct regulatory businesses: the Petroleum Merchandise Pricing Regulatory Company; the Petroleum Equalisation Fund Administration Board; and the Midstream and Downstream Divisions of the Division of Petroleum Assets.

After President Bola Tinubu introduced an finish to the gas subsidy regime, the Federal Authorities closed down the Petroleum Equalisation Fund, consistent with the provisions of the Petroleum Trade Act.

Conferences have been held with entrepreneurs in 2023 to reconcile accounts and pay these nonetheless owed by the federal government.

Nevertheless, it was learnt that members of IPMAN nonetheless have an excellent N10bn with the Federal Authorities.

Talking with our correspondent, Fashola recalled that guarantees have been made however not fulfilled.

“Our N10bn PEF excellent continues to be with the federal government. They promised to pay us however they haven’t.

“That cash was what the federal government used to pay to entrepreneurs to make sure we promote petrol at a uniform worth. For instance, if all of us purchase petrol on the similar place, we can’t promote it on the similar worth attributable to the price of transportation.

“The price of promoting gas within the north might be costly due to how a lot it is going to price to convey the product to the far north. So, the Federal Authorities arrange the PEF to pay the fee in order that we are able to all promote petrol on the similar charge. This was earlier than the sector was deregulated,“ Fashola stated.

He added that after President Bola Tinubu deregulated PMS in 2023, the equalisation fund was stopped, however IPMAN members nonetheless have N10bn unpaid by the defunct board.

IPMAN Publicity Secretary, Ukadike, stated some entrepreneurs want the cash to pay again their loans.

Ukadike appealed to the NMDPRA to make sure immediate fee of the N10bn for ease of doing enterprise.

“We respect the NMDPRA for the intervention to pay the N10bn to entrepreneurs. This can ease entrepreneurs’ efforts to be in enterprise and to purchase extra petroleum merchandise. It would additionally encourage them to distribute petroleum merchandise nationwide,” Ukadike stated.

He disclosed that banks are working after some entrepreneurs over unpaid loans, pleading that the fund be paid quickly.

“The banks are on us. So, if we get this cash, it is going to assist to ease the difficulties entrepreneurs are going through and in addition pay banks their loans. So we attraction that they (NMDPRA) ought to launch this fund as rapidly as doable,” the spokesperson requested.

The NMDPRA has not reacted to the matter. The spokesperson of the company, George Ene-Ita, has but to answer to messages in search of details about the fund.

Dangote seeks mortgage

The Dangote refinery is aiming to lift billions of {dollars} to import crude oil and enhance manufacturing, in response to new studies.

This comes regardless of the launch of the naira-for-crude deal final month, which resulted within the preliminary provide of 4 cargoes to the refinery.

A report by Monetary Occasions, quoting officers conversant in the matter, on Sunday stated the Chairman of Dangote Group, Aliko Dangote, is in talks with industrial lenders, improvement banks, oil merchants and different business contributors to lift funds for crude provides to show into refined merchandise.

One other official conversant in the matter stated it could price about $2bn each 90 days to safe a minimal provide of 300,000 b/d.

In line with the report, the refinery must safe extra crude to achieve the refinery’s capability of 650,000 barrels per day for the challenge tagged as a “recreation changer” for the nation.

Earlier this 12 months, a senior government on the group, Devakumar Edwin, stated the refinery purchased crude from the US and Brazil and, in July, was in talks with African suppliers akin to Libya and Angola to ramp up manufacturing.

Recall that final week, the refinery signed an off-taker settlement with IPMAN to elevate petrol, diesel and different merchandise instantly from the refinery.

The plant started producing jet gas and naphtha initially of the 12 months and petrol in September, elevating hopes that Nigeria might lastly finish a long time of reliance on imported gas.

The report additional famous that buyers have expressed frustration at Dangote’s lack of ability to realize a gentle provide of crude, in response to one banker concerned within the fundraising.

One other added that there was additionally a significant concern amongst potential financiers over publicity to Nigeria’s foreign money, the naira, which has fallen sharply following two devaluations over the previous 12 months.

“The refinery might by no means make a revenue in actual phrases,” stated the second banker. “It was constructed over price range, and the naira, which is a significant foreign money of future income, has devalued massively.”

The Africa Finance Company, a pan-African improvement lender based mostly in Nigeria that’s already an investor within the challenge, is without doubt one of the establishments concerned within the talks to lift cash.

The AFC led a financing spherical in December for funds to supply the preliminary capital to get the refinery up and working as a industrial operation.

Final month, the federal government, by way of the Technical Sub-Committee on Home Gross sales of Crude Oil in Native Forex, agreed to provide the refinery crude in naira for six months within the first occasion, pending additional evaluation.

The deal will final six months within the first section as a result of crude oil, being a global product, is priced in {dollars}, sources confirmed to PidomNigeria.

However stakeholders together with Dangote, have questioned NNPC’s skill to provide the crude the refinery wants as a result of it has bought vital portions of oil on ahead contracts.

Even when NNPC comes by way of with the crude, Dangote would want one other 185,000 b/d, or greater than 5mn barrels a month, to satisfy his goal of 550,000 b/d by January and extra nonetheless as soon as the refinery reaches full capability.

NNPC has a 7.2 per cent stake within the refinery, which was watered down from 20 per cent after it didn’t pay the stability of a deal price $2.7bn. NNPC paid $1bn upfront in money in 2021 and the opposite $1.76bn was purported to be paid for in crude provides.

Dangote Industries declined to remark additional on the fundraising or the industrialist’s talks with the president.

NNPC didn’t reply to requests for touch upon the fundraising or assembly.

The AFC declined to touch upon the discussions over fundraising.