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Tag: Dangote refinery

  • Senior Advocate commends Fed Govt for embracing Dangote refinery 

    Senior Advocate commends Fed Govt for embracing Dangote refinery 

    …Obi suggests ways to ease petroleum pricing volatility 

    A Senior Advocate of Nigeria (SAN) and an oil sector player, Paul Obi, has commended the federal government’s decision to embrace the Dangote refinery and supply it crude in naira.

    The senior lawyer said the measures were capable of arresting the current volatility in petroleum pricing in the country and ease the people’s suffering.

    Obi, who was among the 87 lawyers conferred with the rank of SAN on Monday, spoke in Abuja at a reception held in his honour.

    He said: “It is good that the government is trying to do the right thing. They have embraced the Dangote refinery and are supplying crude to it in naira, which frees the pressure on foreign exchange in the country.

    “If one or two of the government’s refineries work, then the pressure we are having in that sector will certainly reduce, if not wiped off. If the government’s refineries work, everybody will be happy for it,” he said.

    Obi, who said he got the SAN rank on his first application, faulted the process adopted in deregulating the nation petroleum sector.

    He said: “It is good to deregulate, because that would free funds for the government and will also engender healthy competition in the industry.

    “But, there are certain fundamental things that should have been done before this full deregulation.

    “The refinery in Port-Harcourt should have been made to work so that what Dangote is doing now in the private sector, is what government’s refineries would have been doing in the public sector.

    “With them (public refineries) working or even one or two of them working, and Dangote’s own working, Nigerian citizens and masses would not have been suffering what they doing today if these (government’s) refineries were put in place before deregulation,” he said.

    Read Also: ‘Why marketers can’t purchase petrol from Dangote Refinery’

    Obi, who is the Company Secretary of an oil and gas firm, NIPCO PLC, said the ongoing reforms in the Supreme Court and across the entire judiciary, if sustained by the Chief Justice of Nigeria (CJN), will go a long way in addressing current challenges in the system.

    Obi, who said he is 34 years at the Bar, noted that the procedure for application for the SAN rank is rigorous, but credible.

    He however, added: “I will advise lawyers, who want to apply, just as I did, to study the guidelines and be sure that they are technically qualified first, before they apply.

    “Yes the process is rigorous, but it has a high degree of integrity. It could be fine tuned hear and there, but all in all, it is a very credible and transparent process.”

    Among dignitaries at the well-attended event were Justices Emmanuel Agim and Chioma Nwosu-Iheme (both of the Supreme Court), Justice Kenneth Amadi (of the Court of Appeal) and Justice Ifeoma Ojukwu (of the Federal High Court).

    Also at the event were Justice Emmanuel Sanyaolu (a retired judge of the Federal High Court) and Justice M. A. Oyafajo (of the Oyo State judiciary).

    Justices Sadiq Abubakar and Tijani Abubakar (both of the Supreme Court) were represented.

  • ‘Why marketers can’t purchase petrol from Dangote Refinery’

    ‘Why marketers can’t purchase petrol from Dangote Refinery’

    • PENGASSAN chief x-rays pricing crisis

    • House of Reps makes case for marketers

    Due to the pricing mechanism in the oil sector, independent oil marketers may not be able to buy petrol for sale from the Dangote Refinery.

    The Nigerian National Petroleum Company Limited (NNPCL) has been the sole off-taker of petrol in the refinery since it rolled out product on September 15.

    However, there has been a pricing disagreement, following which independent marketers have been itching to be given the opportunity for direct purchase from the refinery.

    Also yesterday, the House of Representatives made a case for the marketers to be given the opportunity.

    But an expert in the industry, Festus Osifo, said with the current situation of things, even if independent markets are allowed to buy the product from the refinery, the pump price will be higher than it is present.

    Osifo, who spoke at a news conference in Lagos said:  “The NNPCL buys petrol from Dangote Refinery at a cost, but does some level of subsidy on it. This is the reason other marketers cannot go and buy directly from Dangote Refinery today; not that NNPCL is stopping them (other marketers) from going to buy.

    “But the truth is that if NNPCL is buying at N898 and selling at N950, including factoring in all the costs like those payable to NIMASA, NPA, NMDPRA, etc, and now selling at N700+ to marketers, it means there is a shortfall which NNPCL is managing.

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    “However, if other marketers go directly to buy from Dangote at the same price, they will probably sell at N1,200 per litre. This is the difference. So, it is not that NNPCL is trying to play monopoly.”

    Osifo, who is President of  Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), added: “But if there was 100 percent deregulation, then, everybody can go and buy and sell at whatever price they want; but because there is still some form of under-recovery which NNPCL undertakes, then, that is why we still have some price  distortions,”

    However, Osifo, who doubles as the President of the Trade Union Congress (TUC), absolved Dangote Refinery of any blame on the petrol price disagreement.

    “You must understand where Dangote is coming from. He didn’t invest that amount of money($20 billion) because he is a charity. He will pay interest on the loans obtained to build the refinery,” he said.

    Giving an insight into the crude supply crisis, the PENGASSAN boss said the public must understand that the oil and gas industry is still highly regulated.   

    According to him, the management of the 650,000 barrels per day capacity Dangote  Refinery should have long-negotiated crude supply to the refinery by IOCs and NNPCL before the facility was completed.

    This, he said, is because crude supply or purchases are usually booked ahead of time because the IOCs always have long-term contractual agreements with their customers.

    Besides, he explained that Nigeria had already tied some of its crude oil to loan repayments since 2015.

    This means that the quantity the country produces already has quotas for disbursement.

    Osifo said: “Dangote should have negotiated crude oil supply long before he completed his refinery, not after completion. What Dangote should have done is that he should have started discussing the crude supply and signed contracts with crude suppliers five years ago, not six months into refinery production. This is the truth. Nigeria has already tied some of the crude oil to loan repayment; this happened between 2015 and today.

    “When you hear that Nigeria produces 1.6 mbpd, it is not entirely for the country because there are lots of IOCs as Joint Venture (JV) partners and all of them are in production. So, in crude production, the Federal Government has at best 60 percent while the IOCs have 40 percent at best.

    “This means the portion of JVs has to be disaggregated from the total production volume and once that is done, the portion left is for the government; the IOCs put money in producing the crude oil and it means they are at liberty to sell crude to the highest bidder.

    “Besides, the IOCs have their trading companies, which they are locked in a contract with; these IOCs may also have had off-takers since 2020 or even more whom they may have signed a supply contract with.

    “Government cannot literarily come and compel IOCs to take crude oil and sell to Dangote Refinery. It is a bit tricky because if it also fails to meet their obligation to their contractors, it will become a problem.

    ‘’One of the platforms owned by TotalEnergies, that is, the Egina FPSO, costs $16 billion to build; so they must recover their money. If you strangulate them here, they can go elsewhere.”

    Osifo added that crude supply to Dangote  Refinery was also affected by the likely request to pay a premium since it was an emergency need.

    “They (IOCs) could have told him (Dangote Refinery) that if you want us to supply you immediately, then, you will have to pay a premium because everybody is in business. So, it was the issue of premium payment that led to the initial conversation that they were not supplying him crude oil because most of the IOCs asked him for premium payment.

    “On the part of the NNPCL, they also have their crude oil. But some years ago, the Buhari government borrowed money from AfriExim Bank and some quantities of crude produced daily were tied to paying back this money.

    “NNPCL was importing PMS at a price; so, Dangote is saying pay me the same price that you are paying Rotterdam or Malta to import PMS; but NNPCL is reluctant to pay such because it feels that it pays a high premium on PMS from Malta and others, whereas Dangote Refinery is a Nigerian company and as such, it can’t pay the firm the same amount at which it imports; and that became a problem,” the TUC President said.

    However, Osifo agreed that Dangote Refinery has a right to ask for such payments because it has to pay back his loan.

    “NNPCL wants to calculate it in local conversion. Platts is an international price to calculate PMS and it is usually fixed based on the crude oil price weekly. So, people buy from the refinery at Platts without a premium, but at a particular time NNPCL was importing at Platts plus premium; Dangote wanted the premium paid on the Platts, but NNPCL said since Dangote wanted a premium on the Platts, then, it also has to pay premium on the crude.’’

    Osifo explained that the agreement as of  today is that Dangote is offering PMS at Platts plus N42 as seen in the price template sheet released by NNPCL

    “It was just a contractual issue between both parties; but thank God that they have found a way to resolve it as of today. So, with all the costs imputed, PMS will be around N950 per litre- this is what NNPCL will pay to Dangote, NIMASA, NPA, NMDPRA, and others,” Osifo added.

    Reps make case for independent marketers

    The House of Representatives has called on  the Federal Government to direct the   Nigerian National Petroleum Corporation Limited (NNPCL) and Dangote Refinery to  work out a modality for independent petroleum marketers to be able to lift  petrol from the $ 20 billion newly established facility in Lagos

    The House also wants the NNPCL and Dangote to tell Nigerians the exact depot price of petrol at the refinery.

    The requests followed a motion of urgent public importance by a member of the House, Oboku Oforji.

    Oforji recalled that NNPCL had been the sole off-taker of petrol from the refinery since September 15.

    He added that it was only recently that major marketers got access to lift the Dagote petrol from the NNPCL depots.

    The lawmaker argued that since Nigerians pass through a lot to buy petrol, NNPCL should allow independent marketers to lift the product from the Dangote Refinery.

    He reasoned that doing so would lead to competition, availability and a reduction in petrol price.

    The lawmaker advised that apart from allowing independent marketers to also lift fuel, Dangote Refinery should either build or acquire tank farms or depots in the six geo-political zones of the country .

    He also wants the government to direct NNPCL to reveal the price it sells crude to  Dangote Refinery and  for  the  refinery to make public the price it sells petrol to the oil giant

    Oforji said: “The House is worried that NNPCL and the major marketers as exclusive off-takers, spell monopoly which is equivalent to greed. This is the same NNPCL that has failed to manage our crude and refineries for decades.

    “If this monopoly is not nipped in the bud, the suffering of Nigerians occasioned by the scarcity of PMS will continue and we all know the implications on the economy.

    “No wonder the late MKO Abiola of blessed memory, in a viral video, some years ago, lamented that the NNPCL lacks transparency and accountability.

    “The House is disturbed that allowing the NNPCL and major marketers to lift Premium Motor Spirit from the refinery to the exclusion of independent marketers, is not good enough.”

    According to him, “IPMAN representatives have expressed fears that it may be forced to resort to fuel imports to sustain their businesses.”

    While commending Dangote Group for the commencement of petroleum refining, Oforji said with the feat, the journey to Nigeria’s energy self-sufficiency may have begun.

    “The House notes that by this feat, Nigeria is driving towards energy self-sufficiency, cost and foreign exchange savings, meeting the increasing demand for fuels and attracting foreign capital investment. The generation of forex through the export of finished products, conservation of foreign exchange and huge value addition will contribute to an increase in Nigeria’s Gross Domestic Product.

    Speaker of the House, Tajudeen Abass inaugurated a panel to investigate the crisis in the  petroleum and gas sector

    The committee chaired by House Leader, Julius Ihonvbere will be a joint committee with the Senate.

     Members of the committee are   Kelechi Nwogu, Patrick Umoh and Sada Soli.

    There is need for focus, says Kalu

    Policies have to be taken very seriously,” one-time Minister of Finance Dr. Kalu Idika has said.

    He argued that the management of subsidies and similar policies “goes to the question of economic leadership”.

    “We should not just say we don’t know where we are going,” Kalu said. According to him, the managers of the nation’s economy should work on the best model that will deliver development to the citizens.

    The former minister said the managers of the economy must be flexible to ensure the country is well-positioned to grow.

  • Allow Independent marketers to buy PMS from Dangote refinery, Reps tells FG

    Allow Independent marketers to buy PMS from Dangote refinery, Reps tells FG

    The House of Representatives has asked the federal government to prevail on the Nigerian National Petroleum Corporation Limited (NNPCL) and the Dangote Refinery to allow independent petroleum marketers in the country to lift PMS from the newly established refinery.

    The House also wants the NNPCL to disclose to Nigerians the actual price it was buying PMS from the Dangote refinery, while the company should also disclose to Nigerians how much it was selling the product to NNPCL.

    The resolution followed a motion of urgent public importance sponsored by the member representing Yenagoa/Opokuma Federal Constituency, Bayelsa State, Oboku Oforji.

    Oforji recalled the Dangote Petroleum Refinery began operation in its 650, barrels per day (BPD) integrated refinery on the 15th of September 2024 with the Nigeria National Petroleum Corporation Limited (NNPCL) as the sole off-taker.

    He said recently, the Major Marketers have been given access to lift the product by the NNPCL. We must commend the Dangote Group and congratulate Nigerians as this is no mean feat because our country has been battling for decades with refining our crude without success.

    According to him, by this feat, Nigeria is driving towards energy self-sufficiency, cost, and foreign exchange savings, meeting the increasing demand for fuels, attraction of foreign capital investment, and generation of Forex through the export of finished product, conservation of foreign exchange and huge value addition that will contribute to increasing in Nigeria Gross Domestic Product (GDP).

    He said further that given the high demand by millions of Nigerians for PMS, and the ordeal they go through to get it, NNPCL should allow independent marketers to lift the product from the Dangote refinery.

    He said allowing Independent Marketers, Major Marketers, along NNPCL to lift from the Dangote Refinery will lead to competition and availability of the product, hence reduction in the price of PMS while expressing concern that NNPCL and the Major Marketers as exclusive off-takers, spells monopoly which is tantamount to greed.

    He said the same NNPCL that has failed to manage our crude and refineries for decades in the past.

    He said further that allowing the NNPCL and Major Marketers to lift PMS from the refinery to the exclusion of Independent Marketers, is not good enough, adding that the Independent Petroleum Marketers Association of Nigeria’s (IPMAN) representatives have expressed fears that it may be forced to resort to fuel imports to sustain their businesses.

    He stressed that if this monopoly is not nipped in the bud, the suffering of Nigerians occasioned by the scarcity of PMS will continue and we all know the implications on the economy.

    In the interim, the House wants the Federal Government to mandate the NNPCL and Dangote Refinery to allow independent marketers to lift PMS from the Dangote Refinery, while Dangote Refinery should build, acquire, or partner to get Tank Farms or depots across the geo-political zones in the country, to ease the accessibility of petroleum products to the people.

    Read Also: NNPCL, Dangote Refinery row rages over price of petrol

    It also wants the management of Nigeria National Petroleum Corporation Limited (NNPCL) to reveal the price it sells crude oil to the Dangote Refinery and also mandate the Dangote Refinery to reveal the price it sells PMS to the NNPCL to ensure transparency.

    Meanwhile, Speaker of the House, Abbas Tajudeen has inaugurated a panel chaired by House Leader, Julius Ihonvbere to serve in a joint committee of the Senate to investigate the crisis bedevilling the petroleum sector and proffer recommendations on the way forward.

    Other members of the committee are Kelechi Nwogu (PDP, Rivers), Patrick Umoh (APC, Akwa Ibom), and Sada Soli (APC, Katsina) among others.

  • PENGASSAN to Fed Govt: increase stake in Dangote Refinery to 45%

    PENGASSAN to Fed Govt: increase stake in Dangote Refinery to 45%

    The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has advised the Federal Government to increase its stake in Dangote Refinery to 45 per cent from the current seven per cent.

    Its President, Mr Festus Osifo, made the call yesterday while presenting a communique and recommendations from the third edition of the “PENGASSAN Energy and Labour Summit” in Lagos to newsmen.

    This, PENGASSAN said, is in order to foster product availability to meet local demand and ensure energy assurance and security for the citizens.

    The union said the refineries should be modeled after the Nigerian Liquefied Natural Gas (NLNG), which appears to have been successful.

    He said: “Ramping up efforts to make the Nation’s four refineries work; once operational, the government should divest majority shareholdings.

    “And own at most 49per cent of the shareholding in the four refineries. Core investors will be brought in to take the 51per cent as applicable in NLNG.”

    Bemoaning a situation whereby the inter land petroleum depots in six geopolitical zones of the country are dilapidated, Osifo stressed the need for the government to get the depots fixed in collaboration with the private sector so as to ensure smooth distribution of petroleum products and enhance the national strategic reserve.

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    PENGASSAN also called for the expansion of pipelines that could be used in the delivery of refined petroleum products across the length and breadth of the country as this would reduce the pressure put on the roads by trucks carrying the products.

    The group also recommended digital intervention to curtail crude oil theft; reengineer security architecture; and ensure ease of doing business, by reducing bureaucracies or complex regulations that make the gas investment unattractive to investors, among others.

    Osifo said those caught for crude oil theft should be punished severely by competent courts of jurisdiction to serve as a deterrent to others.

    He said participants were worried that three years after the passage of the PIA the section of the act had not been implemented at all.

    The act stipulated that three per cent of the operational revenue of the oil companies should be contributed to the host community fund.

    He enjoined the government to also create a business friendly environment by creating incentives for more investors to tap into the nation’s abundant gas resources.

    In the upstream, it suggested an amendment of the PIA to include the divestment framework, noting that the previous divestments are not yielding results as the companies lack financial capacity to sustain and expand the divested oil wells.

    The group also enjoined the Nigerian energy sector to leverage Artificial Intelligence (AI) advancement to improve productivity and sustainability, tackle oil theft and smuggling.

  • PMS: Why petrol marketers can’t buy direct from Dangote Refinery

    PMS: Why petrol marketers can’t buy direct from Dangote Refinery

    By Nnamdi Ekene

    Last Sunday, September 15, 20024 the Nigerian National Petroleum Company Limited (NNPCL) commenced the first loading of Premium Motor Spirit from the 650,000-barrel-per-day Dangote Refinery in Lagos and announced a list of retail prices of Dangote Petrol across its outlets nationwide.

    It also revealed that it purchased the fuel from the Dangote Refinery at a price of N898 per litre. The disclosure of the price at which the NNPCL bought the fuel immediately ignited a negative reaction from Dangote refinery, which described NNPCL’s claims as misleading and mischievous.

    The Group Chief Branding and Communications Officer of Dangote, Mr Anthony Chiejina, in a statement said; “Our attention has been drawn to a statement attributed to NNPCL spokesperson, Mr. Olufemi Soneye, we sell our PMS at N898 per litre to the NNPCL. This statement is both misleading and mischievous, deliberately aimed at undermining the milestone achievement recorded today, September 15, 2024, towards addressing energy insufficiency and insecurity, which has bedeviled the economy for the past 50 years”. Chiejina explained that the refinery sold the products to NNPCL in dollars and had yet to make any formal announcements regarding the pricing of PMS. He therefore called on Nigerians to disregard the NNPCL’s pricing claims, noting that the pricing committee appointed by President Bola Tinubu would make an official announcement on October 1, 2024, once naira-based crude sales to local refineries commence.

    While disputing the price claims of the NNPCL, Dangote refinery, however, failed to disclose the actual amount it sold its fuel to the NNPCL. Curious Nigerians have, therefore, been wondering why it is difficult for Dangote refinery to tell Nigerians how much it is selling its product to NNPCL. Some analysts are even suggesting that they are already seeing the same monopoly trend that Dangote has always been accused of but which he has always denied.

    Responding to Dangote refinery’s rebuttal, the NNPCL went ahead to provide a detailed explanation of how it arrived at the N898 per litre price. The state-owned oil company said the refinery’s quoted gantry price per ton was $736, which equates to $0.55 per litre. At the official exchange rate of N1,637.59 per dollar, this amounts to N898.78 per litre in naira terms. NNPCL further noted that statutory charges, such as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) fee, inspection fees, distribution costs, and a profit margin, would be added to the landing cost of PMS to determine the pump price. The charges include the NMDPRA fee, N8.99; inspection fee, N0.97; distribution cost (Lagos) N15.00; and profit margin, N26.48. According to it, once these additional charges are factored in, the cost per liter of petrol in Lagos is projected to be N950.22, while prices in other parts of the country will vary due to transportation and distribution costs.

    The Petroleum marketers in Nigeria were therefore confused over the controversy surrounding the pricing of Dangote Refinery Premium Motor Spirit as released by the NNPCL. They demanded that Dangote Refinery should disclose the price it sold petrol to NNPCL for transparency.

    However, the oil marketers can’t import petrol or buy directly from Dangote Refinery because it is not profitable and cost-effective for them to do so. Executive Vice President, downstream at NNPC, Mr Adedapo Segun while speaking with newsmen said no one has precluded any marketer from importing petrol but that they are unwilling to import because the market is not right for them. He said, “the marketers get approval from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to bring in automotive gas oil (AGO), aviation turbine kerosene (ATK), and petroleum motor spirit (PMS). They then go to the market, check the market indices, and discover that PMS is still being sold below cost, If they bring it in, they will run at a loss. So, they end up bringing only AGO and ATK. They do not bring in PMS because the market is still not right for them. So, it is not because NNPC wants to be the sole importer or provider of PMS. It is because the other marketers won’t do it if it’s not profitable.” he said.

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    The NNPC executive also explained that marketers can not purchase petrol directly from Dangote refinery because the product is still being sold at a subsidised rate. “It is the same thing happening with Dangote refinery petroleum. Dangote is a company and it is going to sell at market price. The market value of PMS is still higher than what the NNPC is selling. So, there is no way the marketers would buy from Dangote. NNPC off-taking is only because the others would not buy at the price Dangote will be willing to sell, which is reasonable. As soon as the price allows for it, you will see the marketers go to Dangote and buy. So, instead of saying NNPC is the only off-taker, let’s put it this way: NNPC is the only entity that is willing to off-take because NNPC has a role under law to be the energy provider of the resort”, he said

    •Ekene sent this piece from Enugu

  • Dangote Refinery: Better times ahead

    Dangote Refinery: Better times ahead

    Sir: Nigerians have long waited for the commencement of the sale of Premium Motor Spirit (PMS) by Dangote Refinery due to its expected benefits. The refinery commenced its first loading of PMS on Sunday, September 15, which according to the Ministry of Finance is a significant step in Nigeria’s journey toward energy self-sufficiency.

    However, according to the federal government, the Nigerian National Petroluem Company Limited,  NNPCL, will be the sole buyer of PMS from the refinery for now, and from October , the NNPCL will begin selling crude oil to Dangote Refinery in Naira and purchasing PMS from the refinery in Naira, while diesel will also be sold in Naira to independent marketers. The decision to make NNPCL the sole off-taker of the PMS from the refinery has raised a lot of dust.

    Many people were disappointed when the NNPCL announced a hike in the price of PMS, as there was a general belief that PMS prices would drop once Dangote Refinery commenced production and sales. The refinery, which is privately owned and profit-oriented, won’t sell PMS for less than its production cost. Some major determinants of its production cost are the price of crude oil on the international market, the Naira-to-dollar exchange rate, and the cost of refining crude per litre. The Minister of Finance and Coordinating Minister of the Economy, Wale Edun said in a TV interview on Sunday, September 15, “We are expecting that as this refinery and others ramp up production, scale, and achieve greater economies of scale, there should be the opportunity—and there is definitely the potential—to reduce their costs, which should be passed on to the consumer.”

    There are concerns from many quarters that the recent hike in the price of PMS could cause a rise in inflation, which Nigeria has struggled to tame. According to the National Bureau of Statistics, Nigeria’s headline inflation on a year-on-year basis dropped to 32.15% in August 2024, from 33.4% in July 2024. Food prices have been the major driver of inflation, and therefore, ordinarily, as we fully enter the harvest season, a continued decline in inflation would have been expected. However, the recent hike in the price of PMS and fluctuations in the foreign exchange rate will affect the inflation figures for subsequent months.

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    The price of PMS is expected to reduce in the long term as economies of scale are achieved by refineries, when more refineries come on stream, leading to competition, and as the Naira begins to gain value. Selling crude oil to domestic refineries in Naira and purchasing refined products from them in Naira will significantly reduce the pressure on foreign exchange. According to the chairman of the Federal Inland Revenue Service, Zach Adedeji, this policy will save $7.32 billion annually by conducting all crude transactions with local refineries in Naira. It will also result in a more stable and stronger Naira.

    The federal government, NNPCL, and Dangote Industries Limited should be commended, as this is the first time in about 30 years that Premium Motor Spirit production has begun in Nigeria. The price of PMS is expected to decrease in the near future, therefore Nigerians should be patient.

    While the hike in PMS prices will impact inflation in the coming months, I don’t expect it to be very significant because food prices, which are the major driver of inflation, will drop further as we move deeper into the harvest season. Beautiful times lie ahead for Nigerians.

    •Kenechukwu Aguolu,<kenerek1@gmail.com

  • Pumping up the truth about Dangote Refinery, by Irving Zulu

    Pumping up the truth about Dangote Refinery, by Irving Zulu

    The Refinery’s proclivity for manipulation and consistent misinformation on the actions and activities of other stakeholders in the petroleum industry could have severe consequences on the country and its citizens.

    At long last , Dangote Refinery’s petrol made its much awaited public premiere in Nigeria. 

    But it was not without the contrived opaque drama, din and discordance that have come to dog every step of the $20Billion behemoth. 

    Or how else can anyone describe the high theatrics that followed a simple announcement of the  price of the pms by the NNPCL, the sole off-taker of the product. 

    Within hours of the announcement, Dangote Refinery issued a screaming media statement denouncing and villifying the NNPCL press release.  

    You couldn’t help but wonder if an organization like NNPCL could not understand how much it paid for a product. 

    Such endless alarm, cacophony and manipulative tactics have become synonymous with the quest of Dangote Refinery’s management to sell petroleum products to the Nigerian public. Take for instance, the X Space  hosted last week by Nairametrics. 

    At this event, the Vice President of Dangote Industries Limited, Devakumar Edwin openly expressed frustration over what he claimed to be a boycott of the Dangote Refinery’s products by the local fuel marketers. 

    He stated that despite the efforts of the Refinery to supply affordable petroleum products to the public, the Nigerian fuel marketers have continued to disparage Dangote Refinery and refuse to buy their products  preferring instead to import refined products from abroad.

    In his words, “Despite the refinery’s large production capacity, local marketers are only purchasing about 3% of the output”. 

    The remaining 97% of the refinery’s production, including diesel, and jet fuel, according to him is exported due to a boycott by local marketers despite their lower prices. 

    Edwin singled out the Depot and Petroleum Products Marketers Association of Nigeria,  DAPPMAN, as the scapegoat of their clear tantrum.

    However, reports from analysts, stakeholders and the local fuel marketers have put a palpable lie to Edwin’s claim. 

    One of the  foremost and indeed most credible associations of the local fuel marketers, DAPPMAN came out to denounce the Dangote Refinery’s claim, with data to buttress their assertion. 

    In a statement on Saturday, September 14, the Executive Secretary of DAPPMAN, Olufemi Adewole, stated unequivocally that “Petroleum marketers have lifted 518,500 metric tonnes of aviation fuel, and automotive gas (AGO) popularly known as diesel from the Dangote Refinery in five months.

    According to him, “Petroleum Marketers have lifted 518,500 metric tonnes of Automotive Gas Oil (AGO) and Jet A1 from Dangote Refinery, (DR) representing 60 percent (60%) of national Truck-out in five months”. 

    This assertion by DAPPMAN is in sharp contrast with Devakumar Edwin’s unsubstantiated claim that Marketers buy only 3% of their products. 

    DAPPMAN’s position was indeed corroborated by documents sourced from Nigeria Midstream Downstream Petroleum Regulatory Authority NMDPRA, which showed that over 40 independent marketers patronize the refinery. 

    These include Asharami, MRS Oil and gas, AA Rano, Ramoil, Prudent, NIPCO, Aym Shafa, Danmarna, TMDK, SAHARA, and SOBAZ, among others. 

    The Nigerian National Petroleum Corporation Limited, NNPCL also doubted the claim of the Vice President of DIL, Devakumar Edwin. 

    The NNPCL spokesperson, Olufemi Soneye, stated: “I don’t believe local marketers will boycott PMS with lower prices, that seems unlikely”. 

    Opinion leaders and stakeholders in the oil industry now view Dangote Refineries as employing manipulative tactics, as well as emotional appeals and sensationalist rhetoric to sway public opinion. 

    They see it as an attempt to manipulate public sentiment and put pressure on government to concede to their caprices, unethical and dangerous strategy.

    Read Also: Dangote petrol will end Nigeria’s energy crisis, says group

    As Tosin Adeoti, a Financial Analyst put it in his Face Book treatise on Friday, September 13, “Aliko Dangote’s strategy has been to cry to Nigerians about some cabal sabotaging his refinery. So that bans could be enacted just like with his other products.” 

    Adeoti added that the management of Dangote Refinery should tell Nigerians the price of his petrol so that marketers could compare with imported fuel which stands at a landing cost of N1,117. 

    He stated emphatically that: “Marketers wouldn’t refuse to buy from Dangote Refinery when it is selling a cheaper product”, adding, “It doesn’t make sense”. 

    Some marketers have also stressed the danger of blackmail, manipulation of data and outright misinformation of the public and lack of transparency especially by behemoths like the Dangote Refinery. Such organisations, they say, tend to foster a culture of fear and intimidation with far-reaching consequences. 

    They point at the statement of the President of the Dangote Industries Limited, Aliko Dangote, who far away in The Bahamas told the world how some mafia tried to sabotage his refinery without any shred of evidence to lend credibility to his claim. 

    “His Vice President, Devakumar Edwin also woke up one morning and, in an unashamed and unsubtle way, accused the Nigeria Midstream Downstream Petroleum Regulatory Authority, NMDPRA, of issuing import licences indiscriminately to marketers to import dirty fuel,” said a marketer who demanded to remain anonymous. 

    “Till today, Edwin  could not provide any verifiable evidence as a testament to his allegation. ”

    But DAPPMAN could not wear this toga of anonymity. 

    In a pungent reaction to the refinery’s allegation,  its Executive Secretary,  Olufemi Adewole,  in a terse press release said: “DAPPMAN  wishes to state emphatically that no member of the association and indeed, no private fuel depot has imported into the country any fuel with specification that is outside of the regulation other than what is currently approved by the NMDPRA and would wish to state that the information from the Dangote Refinery Management is laced with inaccuracies.”

    Another gentleman, an independent marketer in his early 60s, who gave his name as Obafemi, also pointed to how the Dangote Refinery Management accused the International Oil Companies, IOCs,  of trying to frustrate the refinery by selling crude to them at higher prices.”

    They forgot that the IOCs have their own  customers that they are contractually committed to and, more importantly, that those IOCs, by law, are not obligated to sell to them”.

    Still sounding irritated, Obafemi spoke about Aliyu Suleiman, the Chief Strategy Officer of the refinery and his embarrassing confession during an interactive session with the Senate Ad-hoc Committee on Sabotage in the Petroleum Industry. 

    “Before this confession, the Group Chief Commercial Officer, Rabiu Umar had claimed that the NNPCL had been supplying insufficient crude oil, only 33%, for the refinery’s production demand.”

    According to him, Umar made this accusation while speaking to news men in Kano informing them that the refinery had to seek additional 67 % of the crude it needed from elsewhere.”

    Nigerians condemned the NNPCL claiming it was deliberately trying to sabotage Dangote refinery. 

    But alas, standing before the Senate Ad-hoc committee, Aliyu Suleiman, the Chief Strategy Officer, having been grilled by the Senate Committee members, confessed that NNPCL had actually been supplying 60% of the crude required by the refinery contrary to the 33% that Rabiu Umar told Nigerians. 

    “This is blackmail, pure and simple. It is mischievous, misleading and diabolical”, Obafemi lamented. 

    This growing tendency of an organisation to employ  blackmail as a means to win public sympathy and influence government decisions, marketers say, is why the issue of price for Dangote Refinery’s products had been shrouded in mystery and remained blurred and cloudy.

     The marketers deplored the fact that, as at Saturday, September 14, a day to Dangote Refinery’s commencement of the first petrol distribution, they were still in the dark with regards to the price of the product. 

    In separate interviews with the media, the President of the Petroleum Products Retail Outlets Owners Association, PETROAN, Billy Gillis-Harry and the President of the Independent Petroleum Marketers Association of Nigeria, IPMAN, Abubakar Maigandi demanded transparency over the price of petrol from the refinery. 

    Gills-Harry: “We have heard only rumours about the price.We cannot be dealing with business clandestinely.”

    This covert approach and closet politics of price for petrol blew open on the D-Day, the much awaited climactic Sunday, September 15, 2024.  

    NNPCL had parked 300 of its trucks at the refinery, poised to lift the Dangote premium motor premium motor spirit, pms. Then like a special gift to Nigerians, NNPC unleashed the much awaited press release stating the price of the Dangote fuel. As an academic, Dr Uche Okwudili summarize d, “It turned out an anti-climax.”

    This was because, barely a few hours later, “Dangote’s people rejected the press release and its content totally, describing it as misleading and mischievous, aimed at undermining their achievement. They even said they are not selling in naira just yet as their business remains dollar denominated”, he stated. 

    Then he raises a poignant question, “Now that NNPC has come out with a clear estimated pump price in dollar and naira, I hope Nigerians will see the end of all these politics, manipulations and endless back and forth between Dangote Refinery and NNPC, between the refinery and the government, between the refinery and the marketers, between the refinery and 10Cs, in short, between the refinery and everybody”, he concluded amusingly. 

    Finally, it must be said that the controversy, high-wire pressure, manipulative tactics and the vitriolic falsehoods that have defined the Dangote Refinery products off-take should catalyze a national conversation on corporate governance, transparency and accountability. 

    A situation in which organizations like the fuel narketers’ associations, and in particular, DAPPMAN is subjected to outrageous public scrutiny and existential angst because of sheer falsehood, unbridled coercion and pressure tactics like Dangote Refinery”s allegaton of DAPPMAN boycotting its products, must not be treated with mute indifference. 

    It has to be redressed because the oil marketers, with DAPPMAN as their spearhead, have affirmed and reaffirmed their readiness to patronise Dangote Refinery products including pms. All they ask for is transparency and competitive price.

    The government, refinery owners, marketers and business leaders must therefore join forces to create a more transparent and sustainable energy sector that prioritises public interests and indeed survival while seeking profit even in a fully deregulated oil industry.

    -Zulu, an Oil Industry Analyst, wrote in from Abuja.

  • ‘Dangote Refinery will have positive impact on stock market’

    ‘Dangote Refinery will have positive impact on stock market’

    The commencement of the operations of Dangote Petroleum Refinery will have significant positive impact on the Nigerian stock market.

    Capital market operators under the auspices of Association of Securities Dealing Houses of Nigeria (ASHON), yesterday said the Dangote Refinery would have several positive multiplier effects on the Nigerian economy, including the capital market.

    Dangote Group plans to list part of its petroleum businesses at the Nigerian Exchange (NGX) in 2025. Already, three members of Dangote Group are listed on the NGX including the group’s flagship cement company, Dangote Cement; Dangote Sugar Refinery and NASCON Allied Industry.

    Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Sam Onukwue said the Dangote Refinery would have significant impact on job creation, increased government revenue, and enhanced energy security.

    Read Also: Lifting of petrol from Dangote refinery marks industrialization, says Edun

    “It will also have a positive impact on the stock market, as it will attract foreign investment and boost investor confidence in the Nigerian economy,” Onukwue stated.

    According to him, the coming of Dangote Refinery marked a new dawn not only for the Nigerian energy sector but the entire Nigerian economy.

    Onukwue commended President of Dangote Group and Chief Executive Officer of Dangote Petroleum Refinery, Alhaji Aliko Dangote for his commitment, faith in the Nigerian economy and tenacity.

    He noted that Dangote, a former President of Nigerian Stock Exchange, now Nigerian Exchange (NGX) has shown an impeccable strong will to succeed in the face of several obstacles, describing him as an inspiration and legend in the annals of African history.

    “You remain an inspiration as you have clearly demonstrated that in all key sectors of our economy and beyond that Nigeria nay Africa can only be developed by Africans,” Onukwue said.

    Secretary, Association of Securities Dealing Houses of Nigeria (ASHON), Athan Ogbozor described the refinery’s commencement of operation as a new dawn for the Nigerian economy.

    “We pray the government and indeed the good people of Nigeria will continue to appreciate and honour you for the great feat you have achieved for the economies of our continent. You have single handedly saved our country from the shackles of ravaging external economic forces that put prey on our foreign reserves as well as the monster of oil subsidies.

    “We rejoice with you and the good people of Nigeria while we pray that God will grant you long life in good health to enjoy the fruits of your uncommon vision for Nigeria. Congratulations once again, and thank you for your vision and tenacity in rendering this selfless service to our fatherland,” Ogbozor added.

  • Lifting of petrol from Dangote refinery marks industrialization, says Edun

    Lifting of petrol from Dangote refinery marks industrialization, says Edun

    Petroleum product lifting from the Dangote Petroleum Refinery and Petrochemicals is a significant step towards national industrialisation and self-sufficiency in refining, the Federal Government said yesterday.

    The remarks made by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, came after the Head of Communications, Dangote Group, Mr. Anthony Chiejina, confirmed that trucks belonging to the Nigerian National Petroleum Corporation Ltd. (NNPCL) had begun transporting petrol from the refinery located in Ibeju-Lekki, on Sunday in Lagos.

    According to the News Agency of Nigeria (NAN), Edun, who led a delegation, described the development as a landmark moment that will revitalise Nigerians’ confidence in domestic industrialisation and refining capabilities.

    He said: “This marks Nigeria’s return to local refining and supply of petroleum products, a significant milestone after decades of import reliance.”

    Read Also: Oil marketers fault Dangote Refinery’s claim of low patronage

    The minister, accompanied by the Executive Chairman, the Federal Inland Revenue Service (FIRS)/Chairman, Technical Sub-Committee on Naira-based crude sales to local refineries, Dr. Zacch Adedeji, said that this initiative would ensure Nigeria’s energy security and independence.

    He highlighted the benefit of alleviating persistent fuel scarcity and long queues at gas stations, aligning with President Bola Tinubu’s vision of adding value to raw materials before export.

    Edun further acknowledged Tinubu’s role in establishing the free trade zone concept during his tenure as Lagos State governor.

    The minister said: “This achievement strengthens Nigeria’s energy security and supports the government’s policy of promoting domestic investment.

    “President Tinubu’s vision was to ensure no raw material leaves Nigeria without added value. I commend President Tinubu for facilitating the supply of crude to local refineries in naira and for his role in this achievement.”

    Edun commended President of Dangote Industries Ltd., Aliko Dangote and his team for restoring Nigeria’s position as a producer of refined products, nearly three decades after the country ceased local refining.

    He commended Dangote’s patriotism and unwavering commitment to bringing the refinery project to fruition despite initial doubts.

  • Oil marketers fault Dangote Refinery’s claim of low patronage

    Oil marketers fault Dangote Refinery’s claim of low patronage

    …list impediments

    The claim by Dangote Refinery Management that only about three per cent of local oil marketers patronise the refinery since it commenced production of diesel and aviation fuel early this year has been faulted by marketers.

    Devakumar Edwin, Vice President, Dangote Industries Limited, asserted yesterday that only about three per cent of local oil marketers are purchasing refined products from the 650,000 barrels per day refinery.

    “The conglomerate of all oil marketers is refusing to buy from us. It is very strange that after putting up the refinery to supply the products locally, we have to export every diesel and jet fuel because they do not want to buy from us,” he said.

    Faulting Devakumar,  local oil marketers said despite some impediments allegedly created by the refinery management,  “we have continued to patronise the refinery between April and September this year. “

    Quoting from records at their disposal, which they claimed to have sourced from the database of Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), they said local oil marketers, at various times between April 9 and September 9 2024, loaded about 30 vessels laden with over 17,000 metric tonnes of products.

    The local companies that patronised Dangote Refinery during the period in question include  Nigerian National Petroleum Company Limited (NNPCL), Sahara Energy, MRS Oil & Gas, Rainoil, NIPCO, A.A. Rano, UGL (NIPCO), AYM Shafa, TMDK and Prudent Petroleum in addition to 33 others local oil marketers. 

    They said available data showed that these local companies berthed their vessels, loaded products and departed the refinery to their various depots at various times between April and September this year.

    Olufemi Adewole, Executive Secretary of DAPPMAN, in an earlier media interface, had asserted that local oil marketers are excited about the entrance of Dangote Refinery into the Nigerian downstream sector and that there is no reason for members of his association not to patronise the refinery as long as there is a level playing field and room for healthy competition.

     He confirmed that members of his Association have continued to patronise the Refinery since it commenced production. 

    Although local oil marketers are inclined to patronise Dangote Refinery,  they said that some trade policies of the Management of the Refinery may have constituted a serious hindrance to patronage by local oil marketers. 

    They alleged that some of the policies of the Dangote Refinery management have constituted serious impediments for local marketers. One policy of the refinery they claimed not to be happy with is the alleged restriction of loading to a minimum of 20,000 metric tonnes per buyer of diesel.  They said it is difficult, if not impossible, for local oil marketers that  want to buy less than the minimum quantity.” 

    Read Also: FG to adopt Digital Travel Credential to ease air travel

    They said further: “Dangote Refinery restricted loading to 20,000 metric tonnes minimum and many marketers, who required lower volumes of 5000, 10,000 and 15,000 metric tonnes, of any product: AGO or ATK, were denied by Dangote Refinery; such marketers are seen as not being worthy of their attention. 

    ” Marketers wanted to co-load their volumes but disparity in the time the product is required differ and Dangote Refinery refused to reconsider requests for these lower quantities. How do you then turn around to blame the same marketers for not patronising the Refinery?”

    They also said that local marketers have been confronted with payment options challenges. They disclosed that payment for cargo offtake from the Refinery should not be in US dollars, but in Naira. 

    “Local oil traders with Dangote Refinery should have the option of payment in Naira as this will reduce the attraction of trading with international suppliers and will reduce the pressure on the Naira. But as at now, this is not the situation.”

    On the claim that because of low patronage by local marketers,  the Refinery is being forced to export its products, the marketers pleaded for a review of the current policies. 

    ” We are  disadvantaged by the Dangote Refinery policy of selling Big Parcels of products to international traders who then take such products offshore Lome and resell to Nigerian oil traders in small parcels and in market terms that they are used to, such as credit terms, in Naira (eliminating exchange risks) and in quantities needed, and of course higher than what they paid Dangote Refinery. ” they said. 

    “Despite all these challenges arising from the Dangote Refinery Management trade regulations, local oil companies have shown genuine intention and have actually gone ahead to patronise the Refinery far beyond the three per cent mentioned by  the Group’s Vice President. 

    “It is only the Refinery’s management that can widen the scope of the patronage by relaxing all the policies that are not in the interest of the local traders,” they said.