Energy
Dangote Lauds NUPRC For Publishing Domestic Crude Supply Obligation Guidelines
. . . Says local price will continue to increase because Trading arms offer cargoes at $2-$4 per barrel, above NUPRC official price
. . . Insists IOCs are frustrating its crude supply demands
The Management of Dangote Industries Limited (DIL) has commended the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for its various interventions in the oil company’s crude supply requests from International Oil Companies (IOCs), and for publishing the Domestic Crude Supply Obligation (DCSO) guidelines to enshrine transparency in the oil industry.
The Vice President, in charge of Oil & Gas at Dangote Industries Limited, Edwin noted that, “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.”
Edwin insisted that IOCs operating in Nigeria have consistently frustrated the company’s requests for locally produced crude as feedstock for its refining process.
He highlighted that when cargoes were offered to the oil company by the trading arms, it often came at a $2-$4 (per barrel) premium above the official price set by NUPRC.
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“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.
He urged the regulatory commission to take a second look at the issue of pricing.
Edwin’s response came against the background of a statement by the Chief Executive Officer of NUPRC, Engr. Gbenga Komolafe, in an interview on ARISE News TV, where he stated that “it is ‘erroneous’ for one to say that the International Oil Companies (IOCs) are refusing to make crude oil available to domestic refiners, as the Petroleum Industry Act (PIA) has a stipulation that calls for a willing buyer-willing seller relationship.”
Edwin noted that “The NUPRC has been very supportive to the Dangote Refinery as they have intervened several times to help us secure crude supply. However, the NUPRC Chief Executive was probably misquoted by some people hence his statement that IOCs did not refuse to sell to us. To set the records straight, we would like to recap the facts below.
“Aside from Nigerian National Petroleum Corporation Limited (NNPCL), to date, we have only purchased crude directly from one other local producer (Sapetro). All other producers refer us to their international trading arms.
“These international trading arms are non-value adding middlemen who sit abroad and earn margin from crude being produced and consumed in Nigeria. They are not bound by Nigerian laws and do not pay tax in Nigeria on the unjustifiable margin they earn.
“The trading arm of one of the IOCs refused to sell to us directly and asked us to find a middleman who would buy from them and then sell to us at a margin. We dialogued with them for 9 months and in the end, we had to escalate to NUPRC who helped resolve the situation,” Edwin stated.
According to him, “When we entered the market to purchase our crude requirement for August, the international trading arms told us that they had entered their Nigerian cargoes into a Pertamina (the Indonesia National Oil Company) tender, and we had to wait for the tender to conclude to see what is still available.
“This is not the first time. In many cases, particular crude grades we wish to buy are sold to Indian or other Asian refiners even before the cargoes are formally allocated in the curtailment meeting chaired by NUPRC.
“However, we would like to urge NUPRC to take a second look at the issue of pricing. NUPRC has severally asserted that transactions should be on a willing seller/willing buyer basis. The challenge, however, is that market liquidity (many sellers/many buyers in the market at the same time) is a precondition for this. Where a refinery needs a particular crude grade loading at a particular time then there is typically only one participant on either side of the market.
“It is to avoid the problem of price gouging in an illiquid market that the domestic gas supply obligation specifies volume obligation per producer and a formula for transparently determining pricing. The fact that the domestic crude supply obligation as defined in the PIA has gaps is no reason for wisdom not to prevail”, Edwin stated.
In the wake of a prolonged power crisis impacting Northern Nigeria, Minister of Power Adebayo Adelabu visited the Zawaciki 1MWp mini-grid project in Kano, underscoring the potential of decentralized renewable energy solutions to alleviate regional power shortages.
The project, operated by Bagaja Renewables, provides daytime electricity to the Gida Dubu community, offering a vital source of power as the region faces widespread blackouts.
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Sadiq Zakari, Managing Director of Bagaja Renewables, welcomed the Minister to the facility and highlighted the critical timing of the visit.
“Bagaja Renewables had the distinct honor of welcoming the Honorable Minister of Power to the Zawaciki 1MWp interconnected mini-grid,” Zakari said.
“This visit comes at a critical time, as Northern Nigeria endures a prolonged blackout, underscoring the urgent need for alternative power solutions.
The Zawaciki mini-grid has been instrumental during this crisis, providing at least 9 hours of daytime electricity to the Gida Dubu community, demonstrating the potential of renewable energy in addressing the region’s energy needs.”
Minister Adelabu praised the Zawaciki project as a model for interconnected mini-grids nationwide, noting its role as a sustainable solution for communities grappling with unreliable power supply.
“The Honorable Minister expressed admiration for the Zawaciki project, recognizing it as a viable proof of concept for interconnected mini-grids across Nigeria,” Zakari stated.
“He emphasized the importance of such initiatives and called on state governors and other key stakeholders to support efforts to decentralize and strengthen the nation’s power infrastructure.
By backing projects like Zawaciki, stakeholders can play an instrumental role in reducing reliance on the national grid and ensuring a more stable power supply for local communities.”
Zakari underscored the transformative potential of private-sector renewable energy projects in Nigeria’s power landscape.
He said, “As we have witnessed here at Zawaciki, private-sector-driven renewable energy solutions can transform Nigeria’s energy landscape. With the right policies and support, we can empower communities and enhance energy resilience, even in times of national power instability.”
In addition to the Zawaciki project, Bagaja Renewables is developing several renewable energy initiatives across Northern Nigeria. Among these are:
Barhim Estate, Katsina: A residential power initiative aimed at expanding energy access for households in the region.
Kura-Karfi Commercial Cluster, Kano: Focused on delivering clean and reliable power to commercial areas, this project aims to support local businesses and stimulate economic growth.
Kafin Hausa, Jigawa: With site fencing completed, Bagaja Renewables is preparing to begin technical design and engineering work for a mini-grid in Kafin Hausa, slated to start construction soon.
Zakari said, “These projects represent Bagaja Renewables’ unwavering commitment to building a resilient, decentralized, and renewable-powered energy future across Northern Nigeria.
“Bagaja Renewables is dedicated to collaborating with the government and stakeholders to scale up renewable energy solutions that will support communities, industries, and essential services.
“We believe that decentralized power generation is the future for Nigeria, and we are eager to contribute to a sustainable, reliable, and inclusive energy system for all.” he added
Power has been restored across Plateau, Bauchi, Gombe, and Benue States, bringing relief to residents who endured a 10-day blackout.
The Jos Electricity Distribution Company confirmed that electricity was reinstated around 7:20 p.m. on Wednesday, prompting celebrations in Jos, the Plateau State capital, and other affected areas.
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The prolonged outage was caused by the tripping of a major 330kV transmission line between Benue and Enugu states, leaving several northern states without power.
The blackout severely impacted daily life and economic activities, with residents expressing frustration over the disruption to businesses, healthcare services, and personal livelihoods.
In response, President Bola Tinubu took swift action, summoning Minister of Power Adebayo Adelabu and National Security Adviser Nuhu Ribadu to address the crisis.
Presidential Adviser Bayo Onanuga disclosed on Monday that President Tinubu directed the Ministry of Power and relevant agencies to expedite restoration efforts.
“President Tinubu is deeply concerned about the reports of vandalism and deliberate destruction of essential power infrastructure,” Onanuga said in a statement.
“The President has tasked TCN engineers with bringing immediate relief to the affected states and implementing a long-term solution to prevent future outages.”
The Federal Government of Nigeria Power Company (FGN Power Company) has announced significant progress in the pilot phase of the Presidential Power Initiative (PPI), which is set to revolutionize the nation’s electricity transmission landscape.
The initiative, in partnership with Siemens, aims to enhance the country’s power infrastructure through the deployment of advanced technology and equipment.
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Kenny Anuwe, the Managing Director and CEO of FGN Power Company, revealed that the installation and commissioning of eight power transformers across key locations are now complete.
The transformers have been successfully deployed in Ajah, Maryland, Apo, Okene, Ihovbor, Amukpe, Potiskum, and Birnin Kebbi, resulting in a notable increase in the transmission wheeling capacity by 569.6 megawatts (MW).
In addition to the transformers, three mobile substations are operational in Ajah, Jebba, and Kawnar Dangora, further boosting the transmission capacity by an additional 151.2 MW.
Anuwe emphasized that these enhancements are pivotal in addressing the energy needs of the country and supporting economic growth.
Looking ahead, Anuwe stated that the transmission network will be augmented by an impressive 720.8 MW, with plans to commission the remaining equipment to deliver at least another 500 MW by the end of 2024.
This strategic initiative is expected to significantly improve power distribution and reliability, marking a transformative step towards a more robust energy sector in Nigeria.
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