Anxiety as Dangote may soon have monopoly over Nigeria’s oil sector
After the cement sector has virtually been taken over by Africa’s richest man, Alhaji Aliko Dangote with the tacit support of the Federal Government, the Nigeria National Petroleum Corporation Limited, NNPCL, seems to have also perfected arrangements to hand over the crucial oil sector to the Kano-born business conglomerate.
Dangote whose refinery with the capacity of processing 650,000 barrels of crude oil per day was inaugurated at the eve of President Muhammadu Buhari’s exit from power, is expected to commence operations by late July.
Ahead of this date, the NNPCL has confirmed that once the Dangote Refinery starts pumping out refined petroleum products, the NNPCL will cut down on its imports of Premium Motor Spirit, popularly called petrol.
Wawa News Global reports that NNPCL is currently the sole importer of petrol into Nigeria, a task which it had shouldered for several years.
Other oil marketers have since, stopped importing petrol following their inability to access the United States dollars at the official rate.
The Group reportedly borrowed US $3 billion to build the refinery, which probably cost US $3.8 billion to build but was re-valued in paper to cost US $13.9 billion when it was 70% completed.
Curiously, NNPCL owns 20 per cent stake in the Dangote Refinery.
NNPCL led by Mele Kyari, the statutory industry regulator and affirmatively a competitor with three moribund refineries in Port Harcourt, Warri and Kaduna, decided without public knowledge or input, to buy 20% shares in Dangote Refinery. 20% shares is US $2.8 Billion.
Meanwhile, only about US$2.65 billion is required to revamp Warri and Port Harcourt refineries.
Many Nigerians are yet to come to terms why the Federal Government would abandon its own refineries and be investing in a private Refinery that is ironically its competitor.
It is not clear if some Government officials also invested in the Dangote group on an individual basis.
NNPC, the industry regulator had advised the House of Representatives Appropriation Committee that the Dangote Refinery would be up and running in March 2023, hence, there would be no need to make provisions for Subsidy in 2023/24 budget.
Unfortunately, the Refinery is not yet refining and there are no provisions for subsidy in the budget but President Bola Tinubu had hurriedly announced the stoppage of fuel subsidy.
At the commissioning of the refinery, Central Bank Governor, Godwin Emefiele, announced that Dangote had paid back 70% of the loan he took for the Refinery.
The question now is: How did a Refinery that is not operational raise money to pay 70% of its debt?
It is not clear if the Nigeria stock exchange has any record of share sales in relation to Dangote Refinery other than the NNPCL investment.
It appears that the same style adopted during the cement monopoly move has now been adopted to grant Dangote the exclusive right to supply petrol to NNPC at a price to be determined by Dangote.
There are fears that fuel subsidy removal was planned and agreed by the cabal in Government as a pre-condition for Dangote to build a refinery when the Western world is moving away from fossil fuel.
The removal of the subsidy may after all, be to maximise profits for the owners of Dangote Refinery.
Former President Muhammadu Buhari, had described Dangote’s refinery as a game-changer.
Speaking also at the inauguration, Dangote, said the facility would put an end to the inflow of toxic substandard petroleum products into Nigeria, adding that the refinery would meet 100 per cent of Nigeria’s fuel needs.
Dangote also stated that the refinery would start delivering refined products to the Nigerian market from late July or Early August this year.
Confirming the scaling down of oil import because of Dangote, NNPCL Spokesman, Garba-Deen Muhammad, said the organization would scale down oil import once Dangote begins operation.
“NNPC Limited is bringing in products from outside Nigeria as a matter of necessity, not as a matter of choice. We would have preferred that we produce here, refine here and we sell and provide the energy security that the country needs.
“Because of the circumstances that surround our refineries, we cannot allow the country to be grounded. So we have to buy wherever we can get and sell. So if Dangote products are available, why should we not buy from Dangote?
“There is absolutely no reason. And that is the reason why we are interested in the Dangote Refinery. We are co-owners, shouldn’t we do business with our partners rather than do it with other people?”
Muhammad explained that the NNPCL would be supplying crude oil to the Dangote Refinery based on business agreement between both parties, and that this would be in accordance with the international price of crude.
“NNPC owns 20 per cent of that asset and we have an agreement with Dangote that we will supply the refinery with crude. So as soon as Dangote begins to request for crude to pay for it, NNPC is prepared to supply the crude as a business transaction.
“We have been selling crude to different parts of the world for decades, and it is not whether we will sell it to Dangote, for why won’t we sell to Dangote when we are selling to other refineries and countries?”
NNPCL Group Chief Executive Officer, Mele Kyari, recently stated that the supply of 300,000 barrels of crude oil per day by the national oil firm to the Dangote Refinery would start once the facility commenced operations.
Meanwhile, oil marketers said the cost of refined petroleum products to be produced by the Dangote Refinery would not be known at the moment until the refinery released its pricing template.
They expressed hope that the refinery would improve the petroleum products’ supply situation in Nigeria, but noted that the cost of white products would only be determined by the pricing template of the facility.
The Secretary, Independent Petroleum Marketers Association of Nigeria, Abuja-Suleja, Mohammed Shuaibu, said, “By the time it starts producing, we would see how implementation is going to be and his template. We cannot say much about the refinery until it starts. So let us see the mode of production, how it is going to look like in terms of its pricing template.”
Commenting, President, Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, said the pricing template from the new refinery would guide operators on what would be the cost of refined petroleum products from the facility.
Nigerians are apprehensive what would become their fate when one individual highly connected with the political principalities in the land eventually gets the monopoly of the oil sector.
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