The Nigerian National Petroleum Company Limited (NNPC) has been given the sole buying rights of the Premium Motor Spirit (PMS) also called petrol to be refined by the Dangote Refinery and Petrochemical Company.
The information gained prominence as the refinery is reported to have begun processing petrol after delays caused by recent crude shortages.
The $20 billion refinery on the outskirts of Lagos, began operations in January with output of products including naphtha and jet fuel.
With a capacity of 650,000 barrels per day, Africa's largest refinery promises to ease oil producer Nigeria's costly reliance on imported oil products.
"We are testing the product (gasoline) and subsequently it will start flowing into the product tanks," said Devakumar Edwin, a vice president at Dangote Industries Limited.
He did not say exactly when the gasoline would hit the local market.
Edwin said state-oil firm NNPC Ltd, Nigeria's sole importer of petrol, would buy its petrol exclusively.
"If no one is buying it, we will export it as we have been exporting our aviation jet fuel and diesel," Edwin said.
The delivery of the product into the Nigerian market will ease NNPC's struggle to supply the local market.
The company is reeling with debts of $6 billion to oil traders for supply since January.
This has affected its ability to supply the local market where fuel queues have persisted since July.
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Prices have jumped by 45 per cent from the official price of 617 naira ($0.3942) announced after subsidies were removed last year.
"The news that Dangote is processing gasoline couldn't come at a more crucial time given NNPC's statement about its difficulties securing imported supply due to financial strain," said Clementine Wallop, director, sub-Saharan Africa at political risk consultancy Horizon Engage.
She said this "prompts the question of how NNPC will manage purchasing from Dangote, and impresses the need for greater transparency in its finances."
Nigeria is Africa's top oil producer yet it imports almost all its fuel due to years of neglect of its national refineries.
The NNPC has also acknowledged recent reports in national newspapers regarding the company's significant debt to petrol suppliers.
This financial strain has placed considerable pressure on the Company and poses a threat to the sustainability of fuel supply.
According to Chief Corporate Communications Officer Olufemi Soneye, in line with the Petroleum Industry Act (PIA), NNPC Ltd remains dedicated to its role as the supplier of last resort, ensuring national energy security.
"We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide." assured Soneye.
