Olufemi Adeyemi
On Monday, Nigeria’s Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, convened a high-level meeting with senior executives from Dangote Group, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Nigerian National Petroleum Company Limited (NNPC Ltd) to discuss the current challenges facing the Dangote Refinery project.
The special advisor on media and communication to the minister, Nneamaka Okafor, made this disclosure in a statement released on Monday.
In attendance at the meeting were: Aliko Dangote, Chairman
and Chief Executive Officer (CEO) of Dangote Group, Farouk Ahmed, Chief
Executive of the Nigerian Midstream and Downstream Petroleum Regulatory
Authority (NMDPRA), Gbenga Komolafe, Chief Executive Officer of the Nigerian
Upstream Petroleum Regulatory Commission (NUPRC) and Mele Kyari, Group Chief
Executive Officer of the Nigerian National Petroleum Corporation (NNPC)
The stakeholders conveyed their appreciation to the minister
for his outstanding leadership and prompt action in enabling the critical
dialogue, as reported by Ms. Okafor.
The statement indicated that the meeting’s primary objective
was to identify a viable and enduring resolution to the present challenges
impeding the Dangote refinery’s operations. All parties involved displayed a
shared commitment to fostering collaborative and proactive approaches to
problem-solving.
As per the statement, the minister underscored the
significance of collaboration and synergy among all stakeholders to guarantee
the success and optimal functioning of the oil and gas sector, which is crucial
for Nigeria’s economic growth and energy security.
“This meeting marks a significant step towards resolving the
challenges and underscores the minister’s dedication to fostering a conducive
environment for Nigeria’s oil and gas sector,” the statement said.
Recently, the Vice President of Oil and Gas at Dangote
Industries Limited (DIL), Devakumar Edwin, raised concerns regarding the
actions of International Oil Companies (IOCs) in Nigeria. He alleged that these
companies are engaging in practices that hinder the viability of Dangote Oil
Refinery and Petrochemicals.
Specifically, Edwin asserted that the IOCs are deliberately
inflating the premium price of local crude above market rates, making it
challenging for the refinery to procure crude domestically. As a result,
Dangote Oil Refinery and Petrochemicals is compelled to import crude from
distant locations such as the United States, incurring significant additional
costs.
Edwin expressed his concerns regarding the NMDPRA’s
indiscriminate issuance of licenses to marketers, allowing the importation of
substandard refined products into the country.
In response to the recent allegations, the Nigerian
Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) firmly denies
the importation of any substandard fuel into the country. The NMDPRA takes its
statutory mandate to ensure the supply and consumption of only high-quality
petroleum products in Nigeria very seriously.
It is important to note that in 2020, the Economic Community
of West African States (ECOWAS) heads of state endorsed a declaration adopting
the Afri-5 fuel roadmap. This roadmap mandates that certain fuel products must
contain a minimum of 50 parts per million (ppm) liters of sulfur.
On the previous Wednesday, Edwin expressed his concern
regarding the consistent challenges faced by IOCs operating in Nigeria in
obtaining locally produced crude as feedstock for their refining processes. His
response was prompted by a statement made by the chief executive officer of the
NUPRC, Gbenga Komolafe.
Komolafe, in a recent interview on ARISE News TV, clarified
that the assertion that IOCs are withholding crude oil from domestic refiners
is inaccurate. He emphasized that the Petroleum Industry Act (PIA) stipulates a
“willing buyer, willing seller” relationship, ensuring that transactions are
conducted on a mutually agreeable basis.
Edwin asserted that International Oil Companies (IOCs) favor
selling crude to international trading entities, which subsequently resell it
at a profit margin. He emphasized that when trading entities offer cargoes to
the oil company, the price is occasionally $2-$4 (per barrel) higher than the
official price established by the Nigerian Upstream Petroleum Regulatory
Commission (NUPRC).
The Chief Executive of the NMDPRA, Farouk Ahmed, informed
state house correspondents last Thursday that the refinery is still in the
pre-commissioning phase and has not yet received a license.
Ahmed refuted the refinery’s claims that its operations are
being hampered by a lack of crude oil supply from IOCs. He clarified that Mr.
Dangote is requesting the regulatory body to temporarily suspend or halt all
petroleum product imports, particularly automotive gas oil (AGO) and jet
kerosene, and redirect all marketers to the refinery.
The House of Representatives has resolved to establish an ad
hoc committee to investigate the alleged conspiracy by International Oil
Companies (IOCs) against the refinery.
The resolution is a response to a motion of urgent public
importance raised by the Minority Leader, Kingsley Chinda, (PDP, Rivers) on
Thursday.
In the motion, Chinda expressed concerns that the alleged
conspiracy is hindering the refinery from achieving its full potential.
“It is alleged that there is a conspiracy against Dangote
refinery. The IOCs are deliberately frustrating the refinery’s ability to
purchase local crude oil by manipulating and increasing the premium price above
the market price,” he said.
“Chinda further stated that while the IOCs are focused on
exporting raw materials to their home countries, thereby generating wealth and
employment opportunities, and contributing to their GDP, Nigeria remains a
primary destination for refined products. This reliance on imported petroleum
products makes the country vulnerable and dependent on external sources.”
Consequently, the House urged the federal government, the
NUPRC, the Nigerian Midstream and Downstream Petroleum Regulatory Authority
(NMDPRA), and other relevant stakeholders to support the successful operation
of Dangote Refinery.
Following the crisis, Mr. Dangote announced plans to
reconsider investment in Nigeria’s steel industry, citing concerns about
potential accusations of monopolistic behavior.
The Dangote Petroleum Refinery, with a daily capacity of
650,000 barrels, has successfully commenced production of diesel and aviation
fuel as of January.
In an official announcement, the company confirmed the
commencement of production and highlighted that the refinery has received a
total of six million barrels of crude oil at its two Single Point Moorings
(SPMs), located approximately 25 kilometers from the shoreline.
The Initial crude delivery was received on December 12, 2023, and the sixth and final cargo was delivered on January 8.
The organization took a significant step forward in the
initiation of refined petroleum product manufacturing with the acquisition of
an additional one million barrels of Bonny Light crude supplied by the Nigeria
National Petroleum Company Limited (NNPC Ltd).
In April, the organization commenced the supply of petroleum
products to the domestic market.
Last month, Dangote announced that Premium Motor Spirit
(PMS), commonly known as petrol, refined at the refinery, will be available in
the market by July.
NNPC Limited had previously declared its intention to
acquire a 20% stake in the refinery.
However, on the previous Sunday, Dangote stated that NNPC
Ltd now holds only a 7.2% stake in the refinery due to its inability to settle
the remaining balance of its share, which was due in June.
“The initial agreement was for a 20% stake, which was agreed
upon with NNPC. However, they have not paid the remaining balance as of last
year. We have since granted them an extension until June (2024), and they have
indicated that they will maintain their current 7.2% stake. Therefore, NNPC,
representing the government, currently holds only 7.2% ownership, not the
initially agreed-upon 20%.” Dangote said
in a reports.
In reference to recent developments, NNPC Ltd. Confirms that its routine evaluation of the investment portfolio resulted in a reduction in its shareholding in the refinery. Furthermore, Dangote expressed his willingness to transfer ownership of the refinery to NNPC Limited during an interview on Sunday.
HURIWA's Advice to Tinubu: Reconsider the Leadership of NMDPRA
The Human Rights Writers Association of Nigeria (HURIWA) has called for the dismissal of the Chief Executive Officer of the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, due to concerns regarding the agency's impartiality and ethical conduct. HURIWA asserts that Ahmed's apparent preference for the importation of petroleum products, as evidenced by his antagonistic attitude towards the Dangote Refinery, raises ethical concerns and compromises his ability to effectively carry out his duties.
The group stated, “NMDPRA’s position then means that
Nigeria’s population will continue to suffer adversely due to the unrelenting
hike in the pump price of petrol and other crude oil products, such as diesel
and aviation fuel, which has aggravated the costs of living affecting millions
of Nigerian households.”
The Human Rights Writers Association of Nigeria (HURIWA) emphasized the urgent need for the president to take immediate action to address the persistent corruption that has hindered the revival of publicly owned refineries. HURIWA strongly believes that relieving Ahmed of his position is the only effective way to demonstrate the president's commitment to combating corruption and ensuring the successful operation of these refineries.
Furthermore, HURIWA expressed deep concern over Ahmed's public criticism of the first privately built refinery in Nigeria, describing it as an unpatriotic act that should not be tolerated from any public official. HURIWA stressed the importance of supporting and encouraging private sector initiatives that contribute to the nation's economic growth and development.
In a statement released by its National Coordinator, Emmanuel Onwubiko, HURIWA expressed concerns regarding the conflicting statements made by the NMDPRA regarding the sulfur content in Dangote refinery's diesel. Initially, the NMDPRA asserted that Dangote's diesel exceeded the permissible sulfur levels compared to imported products. However, on July 21, 2024, the agency retracted its statement, indicating that a fresh report was expected on Monday to provide accurate information on the sulfur content.
“This has demonstrated the head of the government agency's inability to exercise his authority in a transparent and competent manner," the group added.