…NNPC requests permanent presence of staffs at Dangote Refinery as part of crude deal
…Stakeholders call for establishment of new committee in oil and gas sector
By Seun Ibiyemi
Dangote Refinery has expressed concern over the lack of patronage from petroleum marketers due to low pricing strategies on its product sales.
The Vice President of Dangote Industries Limited, Devakumar Edwin disclosed this on a Twitter Spaces session organised by Nairametrics.
“Over 95 percent of petroleum product importers in Nigeria are not buying from the Dangote Refinery.
“The Dangote Refinery struggles to sell about 29 tankers of diesel per day due to low patronage from local petroleum products importers,” Devakumar said.
He added, “As a result of this poor local patronage, Dangote refinery exports most of its diesel and aviation fuel.”
“Petroleum product marketers in Nigeria have written to President Bola Tinubu to complain that the refinery local prices which have dropped from N1,200 to N1,000 and now N900 per litre are impacting their businesses negatively,” he said.
Edwin highlighted some of the challenges facing the Dangote Refinery and its impact on Nigeria’s fuel supply and prices.
According to him, the refinery, located in the Lekki Free Zone near Lagos, struggles to sell about 29 tankers of diesel per day due to low patronage from local petroleum product importers.
Edwin had earlier said Dangote Refinery products would be exported if the Nigerian National Petroleum Company Limited and other petroleum dealers in the country refused to patronise it.
“We have been exporting aviation fuel, producing kerosene, producing diesel, but yesterday, we started the production of PMS. So, that was the last stage. The only thing now left out is petrochemicals.
“So, the good news for the country is we have started producing PMS from our refinery,” he had said on a radio programme.
Asked if the petrol would be sold locally, Edwin replied, “Well, I explained how there has been a kind of a blockade from lifting our products within the country. The traders have been trying to block (it), so now we have been exporting our petroleum products. PMS, we are ready to pump in as much as possible to the country.
“But if the traders or NNPC are not buying the product we will end up exporting the PMS as we are doing with the aviation jet and diesel,” he declared.
Edwin expressed surprise that the company started facing different challenges it never expected when the refinery was set to commence operations.
He recalled that the philosophy initially was to add value to the raw materials available in the country, regretting that Nigeria is still exporting crude and importing refined petroleum products after over three decades.
…NNPC requests permanent presence of staff at Dangote Refinery as part of crude deal
The Nigerian National Petroleum Corporation (NNPC) has requested a permanent presence at the Dangote Refinery as part of their ongoing crude supply deal.
This was revealed by Devakumar V.G. Edwin, Vice President (Oil & Gas) of Dangote Group.
He disclosed an X, formerly Twitter, Space event organised by Nairametrics titled “Unlocking how Dangote Refinery shapes and price,” where he discussed the progress of Premium Motor Spirit (PMS) production at the refinery.
“NNPC has informed us that they intend to station a team of 6 to 10 people permanently at our refinery. They’ve asked us to provide office space for them since they will be supplying the crude, overseeing the production, and buying back the products in Naira,” Edwin stated.
This request aligns with the NNPC’s aim to closely monitor the entire process, ensuring that crude is supplied and processed efficiently while securing a steady flow of PMS for the country.
Edwin provided further information noting that the discussions with the NNPC revolve around a new model for crude supply where the refinery will buy crude from the government in Naira and sell PMS in the same currency, rather than in dollars.
He noted that the negotiations are ongoing, with critical aspects like crude pricing and the Naira exchange rate yet to be finalised.
“We are still in talks with the government about receiving crude in Naira. The discussions are ongoing, and nothing has been finalised yet. Some unresolved issues include the pricing of crude, the pricing mechanism, and determining the appropriate exchange rate for the Naira,” he said.
This shift marks a significant departure from the refinery’s original business model as a free zone company, which was designed to operate with transactions in dollars.
Edwin explained that Aliko Dangote had agreed to the federal government’s proposal to sell products from the NNPC to the government in Naira, despite the likelihood of financial losses.
According to Edwin, Dangote highlighted the critical need for foreign exchange and the deteriorating value of the Naira as key factors in his decision to proceed with the deal.
“Dangote intervened and said, ‘We are going to accept this because the country desperately needs foreign exchange, and the value of the Naira is deteriorating every day. I understand that I am going to take a loss – because, by the time we sell the product and convert it to dollars, the exchange rate may have worsened.’”
Edwin stated that in his commitment to the national cause, Dangote added, “I am willing to take this loss in the interest of the country. I don’t mind, the country is in bad shape. Someone has to take certain risks, and I am ready to face this loss, no matter how significant it may be.”
…Stakeholders call for establishment of new committee in oil and gas sector
Meanwhile, Stakeholders in the Nigerian oil and gas sector have called for the establishment of a special structure akin to the Bankers’ Committee to drive development in the industry.
The structure will serve as an interface between the upstream and downstream sectors.
One of the proposed structures is a Petroleum Industry Consultative Assembly that will bring together stakeholders from across the oil and gas sectors to be chaired by the Minister of State for Petroleum Resources (Oil).
They also canvassed a committee that would include a Midstream and Downstream Industry Coordination Committee to focus on enhancing collaboration within these sectors, chaired by the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
These were some of the resolutions arrived at during a webinar organised by Major Energies Marketers Association of Nigeria (MEMAN), in collaboration with the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Crude Oil Refiners Association of Nigeria (COREN) African Refiners and Distributors Association (ARDA), and Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN).
The webinar was themed ‘Optimising the Nigerian Oil and Gas Industry.’
In a communique at the end of the webinar, the stakeholders also discussed the implications of recent price hikes in petroleum products and emphasised the need for full market deregulation.
“The creation of industry-wide consultative committees was suggested to enhance collaboration, innovation, and conflict resolution, addressing supply chain inefficiencies and infrastructure deficits was deemed crucial for long-term sustainability.
“These committees aim to foster collaboration, ensure regulatory compliance, facilitate conflict resolution, and provide strategic oversight, akin to the role played by the bankers’ committee in the banking sector,” the communique said.
Continuing, the stakeholders canvassed, “A market-driven pricing mechanism was advocated to promote competitiveness and operational efficiency. The removal of government controls on pricing was seen as essential to fostering a more dynamic and responsive industry.”
“The call for complete deregulation and market liberalisation was reiterated.
“The benefits include improved efficiency, enhanced product availability, and increased private sector participation,” the communique read.