Economist Kelvin Emmanuel says the Nigerian National Petroleum Company (NNPC) is responsible for Dangote Refinery not getting sufficient crude locally, rather than International Oil Companies (IOCs).
Emmanuel said this in an interview with ARISE NEWS on Sunday, as he urged the National Assembly and the President to question NNPC’s inability to provide Dangote Fefinery with the $1.7 billion feedstock required to finalise the acquisition of 20% of the Dangote Refinery.
“I do not agree that the IOCs are to blame for the situation with the lack of feedstock. I think the blame points directly to the NUPRC and the NNPC and the fact that a lot of the Nigerian crude oil has been negotiated on crude oil swap agreements…and then domestic crude oil supply obligations to refineries that, in my opinion, are not existent. The IOCs have what they call cost oil. They have 40%.
“So, if the IOCs pay their royalties and tax oil to NNPC and they fulfil their domestic crude oil supply obligations in line with section 109 of the PIA, the IOCs do not owe the Dangote Refinery a right of first refusal for its feedstock because every crude oil they get in Nigeria actually is exported in fossil agreements that they already have with clients years ahead. So, I think we need to situate the blame where it belongs and it belongs on the shoulders of NNPC.
“So, these are the questions the national assembly and the president should ask the NNPC; why were you not able to pay the $1.7bn in feedstock to complete the acquisition of 20% that will make you own a fifth of the largest refinery in Africa and arguably the world, that has the potential to produce $28bn in revenue on a yearly basis?
“Between 2019 and 2024, NNPC has borrowed $12bn dollars through Afrexim and they have staked about 250 million barrels of crude oil as collateral in reserved base lending for that loan.”
Emmanuel underscored Nigeria’s long history of importing petroleum products and the substantial financial investment made in refinery maintenance over the years.
He also expressed disappointment in the NMDPRA’s stance on Dangote Refinery, particularly the claim that Dangote aims to stop the importation of petrol and diesel.
“The question is Nigeria has been importing petroleum products for 52 years. In the last 20 something years, the government has spent 12 trillion in turn around maintenance and the refineries are still dead. In my opinion, I don’t think those refineries should be relied on anyways. So, if an entrepreneur takes up the challenge of investing $20bn to build a refinery, the government should support him.
“I am actually surprised that the NMDPRA boss still has a job. Isn’t it the goal to reduce or eliminate the need for imports? Nigeria spends $2.4bn monthly on energy imports. With a fully operational Dangote Refinery, we could produce 49.4 million liters of PMS, 26 million liters of diesel, and 12 million liters of Jet A1 daily.”
Emmanuel defended the quality of the Dangote Refinery’s diesel, noting that its output is significantly superior to that of imported diesel, opining that Dangote will wipe off oil importation in Nigeria.
“I would say that the Dangote Refinery is going to wipe off the importation business. The test that has been done at the Dangote refinery produces diesel at 87.6 parts per million. The test that was done for TotalEnergies downstream and Metrics Energy…Total produced about 1824 parts per million diesel for imported diesel into Nigeria and Metrics Energy produced about 2,254 parts per million for imported diesel into Nigeria.
“So, his diesel is way better than what is imported into Nigeria and if the National Assembly wants to do better, they can recruit SGS which is one of the reputable gasoline testing firms in the world.”
Chioma Kalu
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