Dangote refinery: Operators seek FG intervention as marketers opt for fuel import
Operators in the downstream oil sector, on Monday, called on the Federal Government to intervene by ensuring the provision of crude oil to the Dangote Petroleum Refinery as marketers now prefer to buy cheaper imported refined petroleum products rather than patronising Dangote refinery.
They also slammed the international oil companies operating in Nigeria for selling crude oil to Dangote refinery above the global market prices, describing this as “anti-country practice.”
This came as the Independent Petroleum Marketers Association of Nigeria explained that the reason marketers were shunning the diesel and aviation fuel produced by the Dangote refinery was that the products were higher in cost.
The National President, IPMAN, Abubakar Maigandi, stated this while reacting to claims by the Dangote refinery that it had sold about 3.5 billion litres of refined products to Europe and other countries because some marketers were importing dirty fuels into Nigeria.
According to Maigandi, the refusal of the President of the Dangote Group, Aliko Dangote, to collaborate with IPMAN is another factor affecting the $20bn refinery.
The PUNCH reported on Monday that the Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, had accused international oil companies in Nigeria of plans to frustrate the survival of the new Dangote refinery.
Edwin said the Federal Government issued 25 licences for the construction of refineries in Nigeria, but only the Dangote Group delivered on its promise.
He, however, noted that more than 3.5 billion litres of Dangote diesel and aviation fuel had been exported to Europe by the refinery in the past few months, being 90 per cent of its output.
But the IPMAN leader, while speaking with one of our correspondents on Monday, blamed Dangote for the importation of diesel by operators, saying his (Dangote) diesel is more expensive.
Maigandi disclosed that Dangote did not heed the advice of marketers that the current price of diesel and aviation fuel be reduced to beat competitors in the market.
The IPMAN boss maintained that nobody would be encouraged to import the so-called dirty fuel if the products from Dangote refinery were cheaper.
“The major challenge is the cost of the Dangote diesel. We are looking for a reduction from him. He should bring it to a little bit lower rate.
“The fact that people bring in diesel from other countries into Nigeria is his fault. It is because of his price. You know I said earlier that he should bring his price down so that he would discourage importation by the other marketers. His price is higher. If it is lower, why should people buy outside?” the marketer stated.
The Dangote refinery official had accused the Nigerian Midstream and Downstream Petroleum Regulatory Authority of granting licences indiscriminately to marketers to import dirty refined products into the country.
The NMDPRA has since stayed mute on this, ignoring several calls for its reaction to this allegation.
Edwin had said the NMDPRA continued to issue import licences at the expense of the nation’s economy and at the cost of the health of Nigerians “who are exposed to carcinogenic products.”
Edwin lamented that even though Dangote was producing and bringing diesel into the market, complying with the regulations of the Economic Community of West African States, “licences are being issued, in large quantities, to traders who are buying the extremely high sulphur diesel from Russia and dumping it in the Nigerian market.”
He reiterated that as much as a quarter of the petrol and diesel available in West Africa originated from the ports of Amsterdam, Rotterdam, and Antwerp, stressing that these fuels contain sulphur and other pollutants, such as cancer-causing benzene, in quantities up to 400 times the limits permitted in Europe.
Edwin said, “The decision of the Nigerian Midstream and Downstream Petroleum Regulatory Authority to indiscriminately grant licenses for the importation of dirty diesel and aviation fuel has made the Dangote refinery expand into foreign markets.
“The refinery has recently exported diesel and aviation fuel to Europe and other parts of the world. The same industry players fought us for crashing the price of diesel and aviation fuel, but our aim, as I have said earlier, is to grow our economy.”
No deal
Meanwhile, the IPMAN president stated that Dangote refused to sign a deal with the independent petroleum marketers for the distribution of its products.
Despite efforts to enter into a business agreement with him, Maigandi said Dangote held on to multinationals whom he said were sabotaging his efforts.
“Again, we gave him a policy that he should involve independent petroleum marketers in direct purchases from him. Up till now, he didn’t do that.
“The idea is, immediately you hold independent petroleum marketers, definitely you are the one who is having the market of the country.
“We told him that he should allow independent marketers to start buying fuel directly from him, but he refused. He just holds on to all these multinational companies. These multinational companies will sabotage his efforts because they will tell him that they would buy, but if they buy a little from him, they will go outside to buy another one that is cheaper than his own,” he stated.
Maigandi said Dangote currently sells his refined products through MRS, some depot owners and other major marketers.
“But it is better he sells to us directly because anywhere he takes his product to, independent marketers are buying it there. And when we buy, those selling it in those places will also add their profit margin, making the product a bit higher. He should use independent petroleum marketers to sell his products,” Maigandi advised.
High crude price
Meanwhile, an official of the Dangote Group, who spoke on conditions of anonymity because he was not authorised to speak on the matter, said the importation of crude oil from the United States should be blamed for the diesel price.
While saying Dangote could not sell his products below the cost price, the official stated that international oil companies were denying Dangote access to crude oil to frustrate the refinery.
“If Dangote gets crude oil locally, there wouldn’t be any issue. You know Dangote is importing with dollars. So, there is no way Dangote will sell below the cost price. But these traders are importing dirty fuels from Russia at a cheaper price.
“We keep importing crude from the US because the IOCs refuse to sell to us. That’s the problem. If IOCs could be selling to us, we wouldn’t have any crisis; we would be selling at a price everybody would be happy with. Look at what the dollar is saying now; if we are buying crude at a dollar that exchanges for N1,484, how much do you want us to sell? But if we are getting it in Nigeria, the cost will reduce and it will be cheaper.
“If the Federal Government allows us to buy in Nigeria, it will be cheaper. What we need to do is just to refine and sell. But in this case, we have to import from the US, so it’s very expensive. Some people are just playing politics with this thing to frustrate the refinery,” the Dangote Group official stated.
Our correspondent recalls that Aliko Dangote recently recounted how the refinery crashed the price of diesel in Nigeria from around N1,600 per litre to N1,000.
As of now, the price of a litre of diesel is around N1,200, an amount the independent petroleum marketers described as too high.
Recall that Dangote recently said Nigeria would no longer import any fuel by the time he begins the sale of PMS in the third week of July.
Marketers slam IOCs
Oil marketers lambasted the IOCs for raising the cost of crude oil to the Dangote Petroleum Refinery above the global market price by about $6/barrel, describing this as anti-country practices.
The dealers in the downstream oil sector under the aegis of the IPMAN and the Petroleum Products Retail Outlets Owners Association of Nigeria declared that the Federal Government should mandate the IOCs to supply crude to the refinery.
Dangote Group’s Edwin had on Monday said the IOCs were deliberately and willfully frustrating the refinery’s efforts to buy local crude by hiking the cost above the market price by $6, thereby forcing the refinery to import crude from countries as far as the US, with its attendant high costs.
He also talked about the importation of dirty fuel into Nigeria due to the licences issued by the NMDPRA
The NMDPRA has since remained silent about this accusation despite repeated attempts to get the authority’s position on the claims.
When our correspondent contacted the NMDPRA spokesman, George Ene-Ita, on Sunday, he requested details about the claims of the Dangote official. This was sent to him, but he did not reply.
On Monday, Ene-Ita told our correspondent that the agency was preparing a reaction in a statement that would be sent to the media. He has yet to do so until the time this story was filed.
Reacting to the revelations by the Dangote refinery official on the hike in domestic crude oil price by IOCs, the President, PETROAN, Billy Gillis-Harry, declared, “Clearly, that is anti-country! Because when you are doing business in a country, the country’s welfare, well-being and economic growth should be your business.
“That is why some multinationals said they were packing out of Nigeria when they had exploited all the weaknesses and lukewarm policies that Nigeria has, which empowered them, without them empowering us and not leaving technology transfer to enable us to continue running such businesses.
“So it is a wake-up call for the Nigerian government, not just in the oil and gas sector, but especially in the Trade and Investment sector, to insist on new rules on how to engage in doing business in Nigeria.”
The Public Relations Officer, IPMAN, Chief Ukadike Chinedu, said the hike in crude oil price by the IOCs should be resisted, stressing that since the commencement of in-country refining of crude at the Dangote refinery, some refined products had been stabilised in terms of pricing and availability.
He said, “The government should not allow such to happen. Why should you raise the price of crude for local refiners? That shouldn’t be accepted. The government has to intervene.
“The continued support of the Dangote refinery by the Federal Government in terms of supplying crude oil and other necessary assistance will further bring down prices of petroleum products. As I speak with you, diesel is sold between N1,000 and N1,200/litre and the product is available now. Before Dangote came on board, diesel rose to N1,600/litre.”
Reacting to Dangote’s claim of 3.5 billion litres of fuel export, Gillis-Harry stated that though he could not confirm the export volume declared by the Dangote refinery official, crude should be sold in naira to the plant to ensure some guaranteed volumes of supply in-country.
“If Dangote says they have exported over 3 billion litres of diesel and aviation fuel, we don’t keep their books, so there’s no way we can confirm that. However, that refinery is operating in a free zone, meaning that the operation is not in-country.
“This is why we asked that the refinery should buy Nigerian crude oil. And if he buys it in Nigerian naira, at least that will give us leverage to insist on what part of that production should be for domestic consumption,” the PETROAN president stated.
On his part, Ukadike stated that members of IPMAN were getting adequate diesel supply from the Dangote refinery, adding that there had not been complaints of aviation fuel scarcity since the plant started producing the commodity.
He said, “You know that diesel rose to over N1,600/litre but when Dangote started producing it came down to N1,200 and since then the refinery has been moving the price between N1,000 and N1,200/litre.
“So I’ll say there is adequate supply of diesel from the plant and the price has been stable, while we have not experienced diesel scarcity. Marketers are also loading comfortably from Dangote’s depot. For aviation fuel, I’ve not heard the airline operators complain that it is not available.”
NUPRC reacts
When contacted on Monday and asked to state what the government was doing to provide crude to Dangote refinery, the spokesperson of the Nigeria Upstream Petroleum Regulatory Commission, Olaide Shonola, promised to revert with responses from the designated department.
Although she had yet to respond up till when this report was filed, Shinola pointed out that the issue had been recurring and efforts were being made to address it by the NUPRC.
Recently, while responding to the demand for crude by domestic refiners, NUPRC’s Chief Executive Officer, Gbenga Komolafe, promised to ensure that crude oil was supplied to the operators.
He stated that in compliance with the provisions of Section 109(2) of the Petroleum Industry Act 2021, the NUPRC in a landmark move, had developed a template guiding the activities for Domestic Crude Oil Supply Obligation.
“The commission in conjunction with relevant stakeholders from NNPC Upstream Investment Management Services, representatives of Crude Oil/Condensate Producers, Crude Oil Refinery-Owners Association of Nigeria, and Dangote Petroleum Refinery came up with the template for the buy-in of all.
“This is in a bid to foster a seamless implementation of the DCSO and ensure consistent supply of crude oil to domestic refineries,” Komolafe had stated.
