… PETROAN seeks sustenance of products’ importation
The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri on Tuesday clarified that the Federal Government did not cancel the sale of crude oil in naira to Dangote Refinery.
He described the arrangement for the sale of crude to Dangote Refinery in naira as a pilot scheme.
According to him, based on the scheme, the Federal Executive Council (FEC) directed the Nigerian National Petroleum Company Limited (NNPCL) to sell the feedstock to Dangote in the local currency.
He said, “Government is not canceling it. What was taken to council was a pilot scheme where they said NNPCL should be selling crude in Naira to Dangote Refinery. Or even in that occasion they said that.”
He further noted that what was tabled to the FEC was specifically for Dangote Refinery which was the reason the International Oil Companies (IOCs) and other operators were not involved in the arrangement.
Lokpobiri said, “That one that was taken to FEC was a scheme specifically for Dangote Refinery and they said others will also follow.
“And that was why that one didn’t include the crude for Naira from IOCs and other operators. It was basically only NNPC.”
He said despite the arrangement, Dangote still purchases the feedstock from other operators.
The minister spoke while the Petroleum Products and Retail Outlet Owners Association of Nigeria (PETROAN) visited him in his office at Abuja.
He stressed that “But that doesn’t mean that Dangote doesn’t buy crude from other operators. They buy. But that Naira for crude scheme was basically between NNPC and Dangote Refinery.”
He however said that the government has always advised the refineries to purchase crude oil in any currency whether in Naira or not because it will still be at the prevailing exchange rate.
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“We have always encouraged people to buy crude in whatever currency. Even if you buy in Naira, it is going to be at a prevailing exchange rate.
” And I do know that people have been buying crude to refine in their respective local refineries in Naira,” he said.
He recalled that the dispute in the midstream has always been over the exchange rate, of which the government is not the determinant.
The minister insisted that the currency of crude oil transaction is purely a private sector’s decision.
He said currency of sale of crude oil should be based on the negotiation between the crude oil producers and the refineries.
Lokpobiri, however, insisted that the government has not cancelled the sale of crude oil to local refineries in naira.
He said, “The dispute has always been, what is the exchange rate, which government is not involved? It is purely private sector.
“If you are in the upstream and you have a modular refinery next to you and the man wants to buy crude, it is between two of you that would negotiate and agree on what price.
“And the person may decide to pay you either in dollars or in Naira. We have always done that. So it is not true that the scheme is canceled. Not at all.”
The minister said is now limited liability company which now operates like other international oil firms like the Petrobras, and ALMACO.
He said for NNPCL to operate like its global counterparts, the Petroleum Industry Act (PIA) made it a private sector driven company.
Continuing, he stressed “And so NNPC take decisions that they feel is best for Nigeria in the industry. With limited government interference.
“That doesn’t mean that we can’t call them to order from time to time because they are a national oil company. But the point I’m making here is NNPC has a measure of independence now so that they can make proper business decisions. That will be best for Nigerians.
“So if any time you feel that NNPC is doing something that is of great concern, please come to us.
“We will engage them and then we will sort out all those issues. It’s important also to state that one of the reasons why we decided to create the Petroleum Industry Stakeholders Forum is for us to have a one-stop shop where all of us can gather from time to time.”
The PETROAN President, Dr. Billy Hary requested that considering the vital role PETRON plays in ensuring the petroleum products are efficiently and seamlessly delivered to the Nigerian people, “we wish to request that PETRON be appointed to the board of NMDPRA to assist the agency that is doing so very well in reaching to the grassroots.”
Lokpobiri, however informed him that he has no power to make the association members of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
He said it is only the PIA that stipulates how to constitute the membership of the Authority’s board.
Harry had requested Lokpobiri to allow the association have a representation in the NMDPRA board.
But the minister advised him to work towards the amendment of the PIA to include PETROAN on the board.
He also advised the association to endeavour to establish Compress Natural Gas (CNG) component in all their filling stations.
He also sought a permanent percentage allocation of petroleum products given to PETRON.
He requested for instant loading of petroleum products from depots after payment.
Hary said PETRON supports the local refining of petroleum products and requests that local refineries be encouraged to continue sustained production of refined petroleum products.
Stressing that the government should sustain the importation of petroleum products, the PETROAN boss said “And also importation of products should no longer be ruled out because we want to be able to compete favorably in a fully liberalized economy where every source of petroleum product is allowed and we as the most critical downstream grassroots participants in the industry should be able to tell you sir, when one product is very good and when one product is affordable and how it can work.
“So we want to advocate that refineries should work and importation also should be considered as one of our sources of getting product.
“This will drive healthy competition and guarantee that our domestic prices will not be above import parity thereby ensuring the best possible affordable product with sustainability of petroleum products.”