Nigeria’s hope of succour in form of availability and lower prices, coming from Dangote refinery, the first privately-owned entity in Nigeria, was dashed on Friday, with the authorities in charge of the petroleum industry in the country, giving one of the most damnatory verdicts against firm, reputed to be one of the biggest and most modern in the world.
Regardless the tall accolades, given to the company at its inauguration by former President, Muhammadu Buhari in May 2023, and the hope that it would be a game changer, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) on Thursday said the 650,000 barrels per day Dangote refinery is neither completed nor licensed for operations.
But more damning yet, is also the second part of the assessment so far, with Farouk Ahmed, the NMDPRA Chief Executive, disclosing that the products from the refinery were inferior than those currently being imported into the country, besides accusing the company of angling to monopolise the industry.
Ahmed who spoke against the outcry of Dangote within the week that it was deliberately being frustrated by the International Oil Companies (IOCs) by refusing to sell crude to them, told State House Correspondents, at the Presidential Villa in Abuja that the allegations were untrue.
Hear him: “Well, just like you rightly asked, there are lots of concerns about the supply of petroleum products nationwide and the claims by some media houses that we were trying to scuttle the Dangote refinery; that is not so. Dangote refinery is still in the pre-commissioning stage. It has not been licenced yet. We have not licensed them yet. I think they are at about 45 per cent completion. So we can not rely heavily on one refinery to feed the nation because Dangote is requesting that we should suspend or stop all importation of petroleum products, especially automotive gas oil (AGO) or jet kero and direct all marketers to the refinery.”
Arguing that the expectation is not good for the nation in terms of energy security and also not good for markets because of monopoly, he added: “So, in terms of quality, currently, the AGO quality in terms of sulphur is the lowest as far as West Africa’s requirement of 50 parts per million (ppm). Dangote refinery, as well as some major refineries like Waltersmith refinery, produce between 650 ppm to 1,200 ppm. So, in terms of quality, their quality is much more inferior to the imported quality,” he said.
Devakumar Edwin, had on Monday, directly assailed the IOCs in Nigeria, accusing them of doing everything to frustrate the survival of Dangote Oil Refinery and Petrochemicals, by stifling the process of buying crude, including jerking up the high premium price above the market price, thereby forcing them to import crude from countries as far as the United States, with its attendant high costs.
His words: “If the Domestic Crude Supply Obligation (DCSO) guidelines are diligently implemented, this will ensure that we deal directly with the companies producing the crude oil in Nigeria as stipulated by the PIA. The IOCs operating in Nigeria have consistently frustrated the company’s requests for locally produced crude as feedstock for its refining process.
“When cargoes are offered to the oil company by the trading arms, it is sometimes at a $2-$4 (per barrel) premium above the official price set by NUPRC. As an example, we paid $96.23 per barrel for a cargo of Bonga crude grade in April (excluding transport). The price consisted of $90.15 dated Brent price + $5.08 NNPC premium (NSP) + $1 trader premium. In the same month, we were able to buy WTI at a dated Brent price of $90.15 + $0.93 trader premium including transport.
“When NNPC subsequently lowered its premium based on market feedback that it was too high, some traders then started asking us for a premium of up to $4m over and above the NSP for a cargo of Bonny Light. Data on platforms like Platts and Argus shows that the price offered to us is way higher than the market prices tracked by these platforms. We recently had to escalate this to NUPRC”, Edwin said and urged the regulatory commission to take a second look at the issue of pricing.”