By Elizabeth Chukwuma
For years, Aliko Dangote, President, Dangote Industries have enjoyed a cozy working relationship with the officials of the Nigerian National Petroleum Cooperation, NNPC, now baptized Nigerian National Petroleum Company Limited, NNPCL, with the passage of the Petroleum Industry Bill, PIB,that was signed into Law by former President Muhamadu Buhari, before he exited office on May 29, 2023.
The Kano state business mogul may have taken advantage of the good working relationship with the officials of the oil octopus, to establish Dangote refinery, a subsidiary of the Group. The North American country of the United States, US, $19 billion refinery, located at Lekki Free Trade Zone, LFTZ, Lagos, the nation’s Commercial nerve centre, with a processing capacity of 650,000b/d, may have run into trouble with officials of the Nigerian Medium Upstream and Downstream Petroleum Regulatory Authority, NMUDPRA, and NNPCL over sales of crude oil to it.
The NMUDPRA and NNPCL, officials who were not sure that the multi-billion dollars project, which is now about 45% completed would meet the demand of marketers, let alone motorists , appears to have made things difficult for it to procure Crude Oil to process in the refinery.
Officials of the NNMUDPRA, NNPCL and the IOCs, may have ganged up to sabotage the completion of the multi-billion dollars refinery to ensure that it becomes another state –owned refining and Petrochemical plant located in PortHarcourt, Warri and Kaduna, with a total combined processing capacity of 445,000 b/d.
The Kano state business mogul may have read the handwriting on the wall of the plans of the oil mafia to sabotage his refinery project that he has cried out for help. The business mogul and industrialist, who had continuously being wooed by other African to invest Leaders to invest in their country appears to be in a horn of dilema.
At the on the onset, NNPCL and the IOCS, had started with the sale of 350,000b/d to the multi-billion dollars refinery which had hoped to achieve its full processing capacity of 650,000b/d at the end of 2024.
The refinery has started the supply of Automotive Gas Oil, AGO, popular, diesel and Aviation fuel to the marketers but expected to commence the sales of petrol in August, 2024, amid tough regulatory measures by NMUDPRA.
The regulatory Authorities had questioned the quality of products produced in the Dangote refinery claiming that there was too much sulphur in it but Dangote would not take it. The Multi-billionaire had told those that cares to listen that the quality of his refinery refined products surpassed the ones imported by NNPCL.
Many believe that the NMUDPRA officials may have moved to cripple the angote refinery because the NNPCL, had reduced its stake in company from 20% to 7.2%. Femi Soneye, Chief Corporate Communications Officer of NNPCL, had said that the decision to reduce the company investment in Dangote refiney from 20% to 7.2% to was carefully considered and communicated several months ago to Dangote .
He had said that the change occurred because the company has failed to pay the balance of its 20% share in June. He had revealed that the Management of NNPCL, which periodically assesses its investment portfolio to ensure alignment with its strategic goals had found that that increaed participation in the Dangote refinery beyond ‘’the paid- up sum’’ of 7.2% was unnecessary.
For a refinery that had been designed to produce 50 million litres of petrol and 15 million litres of diesel daily , equating to 10.4 million tonnes of petroleum products and 4.6 million tonnes of Jet fuel annually, may have informed why Dangote saw it as sabotage and was deetermied to fight back using all his business contacts and contacts in the presidency to reach president Bola Ahmed Tinubu.
He got it right. He was said to have reached out to Gilbert Chagouri, a Lebanese businessman and close aly of President Tinubu, who was said to have arranged a closed door meeting between him and the the Nigerian President , ostensibly to resolve their deteriorating relationship and restore the sales of crude oil to his refinery by the NNPCL .
An aggrieved Dangote who could not hide his feeling was said to have opened up at the Thursday, July 25, 2024, meeting which was said to have also had in attendance Chagouri, seeking the President’s intervention to address the challenges in the nation’s oil industry.
Based on what the President may have had heard from the aggrieved Dangote, who appears to be frustrated over his $19 billion refinery investment in Nigerian which the oil mafia are out to turn to a wasted project, the President who had acted swiftly was said to have taken it up with the Federal Executive Council, FEC, on Monday, July 29, 2024 to take a decision on the vexed issue.
Based on the decision that was aid to have been reached at the FEC, the Nigerian President, had ordered NNPCL, under the close watch ofMele KoloKyari, ‘’to start the sales of crude oil to Dangote refinery and other local refineries in naira and not in the US, dollars’’. The Dangote refinery and the other local refineries in turn are to sell their refined products to the marketers not based on the US dollar-naira exchange rate.
Zack Adedeji, Managing Director, Federal Inland Revenue Services, FIRS, had said that the President was emphatic that the sale of crude oil to Dangote refinery and sale refined products from the refinery and other local refineries to the oil marketers and distributors must be denominated in naira and not the US dollars.
Adedeji, had said that the measure was taken ‘’to reduce the strain on the country’s foreign exchange spending and stabilize the pump price of petrol, diesel and other products, across the country.
That much was said to have also been confirmed by Bayo Onanuga, Special Adviser to the President on Communications and Strategy, who had said that that ‘’the order is aimed at achieving stability of the pump price of refined products and Us, dollar- naira exchange rate’’.
The Presidential directive may hay have turned out to be a big blow to Farouk Ahmed, Chairman, NMUDPRA, who had said that Nigerian would not stop importation of petrol and other petroleum products from Europe and Malta Island into the country, because NNPCL, could not rely wholly on the Dangote refinery to meet the country’s demand.
Financial analysts believe that the Presidential order to NNPCL and the IOCs, to sale crude oil to the multi-billion dollars , Dangote refinery and other local refineries in the country would bring to an end the opaque 20-year old ‘’ Domestic Crude Allocation’’ , DCA, scheme, a development expected to positively impact on the country’s petroleum products supply chain and enhance transparency in the industry.
There is no gain saying the act that over the last 20 years, NNPC ,now NNPCL, had operated crude oil sales arrangement that ensures that the country’s 445,000b/d , which ought to be processed at the state owned refineries that are working in bits and fits are refined at the offshore refineries.
It was not surprising why the analysts had seen the Presidential order as a welcome development as the new arrangement where the Domestic crude oil allocation , would be paid for in naira, and the defunct Petroleum Products Marketing Company expected to recoup the proceeds via the distribution and sale of the resulting refined products within Nigeria away from the volatility of the foreign exchange rates and the international crude oil market prices and ensure adequate supplies of refined petroleum products in the country.
The argument in both official and unofficial circles was that such exclusive domestic allocation of crude oil would go a long way ‘’to guarantee the country’s energy security, de-link refined petroleum products’’
Let us hope that the Dangote refinery and the other local refineries including the state-owned refineries which are currently undergoing Turn Around Maintenance, TAM, and when fully operational would not face chronic financial and operational challenges that would force NNPCL authorities to make another hasty arrangement, like the Direct sale Direct Purchase program, of allocating a large chunk of its 445,000b/d, crude oil to a complex oil –for-swap to the trading companies to manage.
