Without any contradiction, the regulation and supervision of the Nigeria’s petroleum industry by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is a crucial aspect of corporate governance, particularly in the effort of ensuring that stakeholders operate in compliance with relevant laws, practices and directives for the overall good of the nation. Moreover, NMDPRA’s responsibility at a time like this becomes more crucial particularly in the aspect of creating room for transparency, accountability and building confidence in the minds of petroleum industry stakeholders and more importantly the sale-purchase deal on premium motor spirit, otherwise known as petrol, between the Nigerian National Petroleum Company Limited, (NNPCL), and Dangote Refinery in Ibeju-Lekki, Lagos State. NMDPRA which was created in September 2021 in line with the Petroleum Industry Act literally seeks to provide legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry and development of host communities has been largely responsible for the technical and commercial regulation of the midstream and downstream operations in Nigeria.
Also with the scrapping of three hitherto extant oil regulatory agencies: Department of Petroleum Resources (DPR), Petroleum Products Pricing Regulatory Agency (PPPRA) and Petroleum Equalization Fund (PEF), The Authority was birthed to a new dawn with the key objective of establishing a progressive fiscal framework that encourages investment in the Nigerian petroleum industry, providing clarity, enhancing revenues for the government while ensuring a fair return for investors. It therefore behoves on a body like this to raise the alarm where necessary and take up necessary action having identified possible threat in the downstream petroleum industry which could cause sudden drop in fuel efficiency, drop in product-quality/specifications and decline in satisfaction by the end-users, all of which could be inimical to the socio-economic growth of the nation. Most recently, some stakeholders raised the concerns about the fact that Dangote cannot supply an adequate quantity of the Petroleum products that can adequately cater to the needs of Nigerians locally, although Dangote claimed it had already delivered 111 million litres of the product within three days (between September 15 to September 17) to, adding that loading was still ongoing steadily.
NNPCL last weekend said Dangote could only deliver 16.8 million litres out of the 25 million litres it initially agreed with NNPCL. There are also indications that the refinery is struggling to deliver the 16.
8 million litres it earlier promised. This is not a time for any guess work, regulators must swing into action before it is too late. Issues like this should never be swept under the carpet but thoroughly interrogated in the larger interest of Nigerians who are faced with acute hunger and hardship.
Recall that the Chief Executive of NMDPRA, Farouk Ahmed, had previously, claimed that the Dangote Petroleum Refinery is about at about 45 percent completion, and that the country cannot rely on it alone because of the implications it would have for energy security and monopoly. He also claimed that Aliko Dangote, president of the Dangote Group had requested that importation of petroleum products, especially AGO or jet kero be stopped and all marketers be directed to the refinery, but explained that doing so would have implications for energy security. Ahmed who spoke to journalists in Abuja, as captured in a now viral video, also noted that products from the Dangote Refinery and othe major refineries in the country are of inferior quality compared to imported ones.
“There are a lot of concerns about the supply of petroleum products nationwide, and the claims by some media houses that we are trying to scuttle Dangote Refinery is not so. Dangote Refinery is still in pre-commissioning stage, we haven’t licensed them yet,” he had said. “I think they are at about 45 percent completion.
So, we cannot rely heavily on one refinery to feed the nation because Dangote is requesting that we should suspend or stop all importation of all petroleum products, especially AGO or jet kero and direct all marketers to the refinery, but that is not good for the nation in terms of energy security. And that’s not good for the nation because of monopoly.” As at the time Farouk was.
making his comments, he was being specific about the pms aspect of the refinery and not the entire refinery. “In terms of quality,” he continued, “currently the AGO quality in terms of sulphur is the lowest as far as West African requirement of 50 PPM. Dangote Refinery, as well as some major refineries like Waltersmith produce between 650 to 1200 PPM.
So, in terms of quality, their quality is much inferior to the imported quality.” The claim generated heated controversies, with many condemning the NMDPRA boss for what he said, which was seen as an attempt to undermine the Dangote Refinery. However, since stringent environmental regulations limiting SO2 emissions have been enacted in many countries over climate and environmental concerns, it is expected that SO2 should be removed from not only in AGO (Diesel) but other petroleum products using a variety of methods.
This has made many pundits to ask a patriotic question if Dangote refinery truly contains desulfurization plant that could properly determine the sulphur content of its refined product(s). Nigerians and other industry players in the petroleum downstream sector should also note that the NMDPRA is the regulator and has officials who collect daily data samples, maintain records, and conduct laboratory tests. Moreover, since the deregulation of AGO, (diesel), NNPCL has not imported diesel.
Therefore, NMDPRA has a statutory duty to certify the quality of any product(s) from any refinery in the country, whether private or public and even refineries owned by NNPC Limited. More worrisome also is the allegations that NNPC Ltd is trying to stifle competition in the refining sector. This statement is utterly laughable, or at best, ridiculous.
How can NNPC Ltd stifle any competitor in the refining business (or any other sector) when it is the major advocate for the revamp of local refining? While NNPC Ltd was rehabilitating its refineries in Port Harcourt, Warri, and Kaduna, it made a deliberate commercial decision to invest in the Dangote Refinery. The same people who criticized NNPCL’s decision at the time are now supporting Dangote which is dangerous and also an assault on the sensibility of Nigerians. NNPCL has allocated over 35 cargoes of crude to the Dangote refinery.
Dangote has received about 23, rejected 2 based on pricing, and is currently negotiating pricing on at least 9 cargoes. The Dangote refinery has received a discount of close to $1 per barrel, saving up to $30 million in discounts. What else os NNPCL expected to do? The question to ask, now is: Is Dangote petrol now cheaper? The answer is no.
Some people see an attempt to underprice the crude and overprice the product. While it is important not to undermine the sanctity of the market, it is also important to lay bare the truth. The reality is that NNPC Limited has entered into several partnerships with private companies to enhance in-country refining.
One such partnership is the stake in the Dangote refinery. They have also signed a contract with African Refinery Port Harcourt Limited (ARPHL) to build a 100,000 barrels per day (bpd) refinery within the Port Harcourt Refinery and Petrochemical Complex in Rivers State. There are several other agreements with other private and modular refineries.
Once these partnerships materialize, Nigeria will become a net exporter of petroleum products. Marketers are simply not against Dangote refinery but they won’t sit idle and watch the refinery mess up their investments over the years. Dangote should desist from mud fights as marketers need him as much as he needs these marketers.
The presence for imported AGO was due to the price variance in favour of foreign traders just as Dangote refinery went for cheaper American crude oil as against the more expensive Nigerian sweet crude. In the spirit of the advice from the House of Representatives, marketers have sheathed sword while DR’s media team are still surreptitiously releasing their propaganda that will not do the industry or the nation any good Those who are trying to be politically correct on this very sensitive matter will be doing greatest disservice to the nation. No investor in any sector should be made to monopolise the market or make any selfish attempt to be bigger than the industry regulator or failing to make recourse to due process or ethical standards.
The beauty of Nigeria’s petroleum industry is that it is governed by an Act which provides the terms and conditions for all the players, including the government, regulators, trade unions, host communities, as well as investors, so as to create a harmonious industrial climate that is investment friendly, healthy and profitable. Ajisafe writes from Akure READ ALSO: Nigeria condemns terrorist attack in Mali.
