Business
Dangote Refinery vs NNPCL: Unfortunately, Nigeria needs both companies to thrive
It is also sad to note that the Dangote refinery has not produced any duly signed and legally enforceable agreement with any domestic crude oil supplier prior to this time and for the purpose of feedstock supply to the refinery, which is very strange for a business of that magnitude, and a highly unusual and unprofessional practice in the oil and gas industry. This is actually the crux of the matter as the oil industry apparently operates differently from the cement and other industries where Mr. Dangote has been an experienced player for decades.
By Yemie ADEOYE
THE saying that when two elephants fight, the grass suffers is being brought to light and affirmed more than any time in recent history by the ongoing tussle nay controversy between the Dangote refinery and the federal government of Nigeria as represented by the state-owned Nigeria National Petroleum Company Limited, NNPCL and the industry regulatory agency, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA.
Gracefully, the minister of petroleum resources, Mr. Bola Tinubu, who also ‘doubles’ as Nigeria’s President has waded in to offer some succor via a directive to the NNPCL to sell a percentage of Nigeria’s crude in Naira to the Dangote refinery. That was a relief according to several industry watchers even if it is seen as a short term solution to a long term situation.
Even as that seem to have calmed frayed nerves for a bit, reports and counter reports continue to hit the news, thereby keeping the issue on the front burner, even after a presidential mediation. Only recently, there has been a back and forth over the facilitation and non-delivery of 29 million barrels of crude oil to the refinery.
It goes without saying that the advent of the Dangote industries in the business of refining at the time it did, and up until this moment was and is still is, a necessity for the Nigerian economy. Even if it’s just for the dignity and pride it brings to the African continent, that alone is enough to fight or die for.
Nigeria’s Minister of State for Petroleum Resources, Heineken Lokpobiri , flanked by Alhaji Aliko Dangote, and heads of NNPCL, NUPRC, NMDPRA
This is outside other immediate economic advantages that accrues to Nigeria as a country, from mass employment to indirect domestic businesses, FDI attraction reduction in forex need and pressure amongst others. The list as they say is endless, only if our business climate is not unduly charged, cumbersome, and difficult for no logical reason.
Almost the same thing applies to the NNPCL, save for the fact that it is a public trust. This company, since inception in 1977 is now almost the single most important company in Nigeria, if only we allow it to work for the country. The issues aren’t so difficult to address, but it seems Nigeria has allowed undue politics and interference to affect the functionality of the NNPCL.
Oil, amongst a few others, is a globally priced commodity, which reacts negatively to undue and non-technical interference. This is the bane of the NNPCL debacle, and until the company, supposedly the largest oil company south of the Sahara is completely free of this interference and obstacles, thereby operating like any other International Oil Company, it will be absolutely impossible for the company to reach its full potentials for the benefit of the global oil and gas industry and the Nigerian economy specifically.
Over the decades, there has been several suggestions on the most beneficial modus operandi for the company, with many experts agreeing that the Nigeria Liquefied Natural Gas, NLNG module will best serve the oil behemoth and better position the company for international plays just like it’s supposed contemporaries, Saudi Aramco, PETROBRAS, PETRONAS, Equinor, SONANGOL and their likes.
Currently, the operational rig count in Nigeria is around 15 rigs. This is abysmally low when compared to other major oil cities or countries. The state of Texas in the USA has 278 operational rigs at work at the time of this report, while Saudi’s Aramco has 300. Algeria has the highest in Africa at 42 rig counts, while even troubled Libya has 20 operational rigs at the moment.
This should serve as a crucial area of focus for the current Nigerian government and indeed, the NNPCL, in order for the country to at least meet the traditional OPEC quota of 2.4 million barrels and enable it meet its contractual obligations, and still feed all domestic refineries starting with the Dangote refinery, with a proviso to produce first for the nations’ local consumption before any export in the interest of national security.
It goes without saying that there would be interests, both foreign and domestic that prefers the status quo and current modus operandi to stay in effect, as they are direct and indirect beneficiaries of the current system, and this is why it is pertinent for the two companies to come together for the common good and national interest.
We live in a world where perception is almost reality, and Nigeria must never lose sight of this fact. Mr. Aliko Dangote is first and foremost a Nigerian, subject to the laws of the country, hence there are several legitimate ways the government can protect its own interest, if any without resorting to a public show.
Again, Inspite of himself and whatever allegations, sentiments or petitions that are leveled against him, Aliko Dangote ought to be properly managed by the regulators and the government for the giant strides he has embarked upon, thereby putting Nigeria on the global map for something positive outside of entertainment.
The nation’s regulator calling out such an investor, said to be the highest single tax payer in the country in such casual manner and on national television is not in the best interest of the nation’s fledgling economy, and image, especially in such a news sensitive industry.
It is also sad to note that the Dangote refinery has not produced any duly signed and legally enforceable agreement with any domestic crude oil supplier prior to this time, and for the purpose of feedstock supply to the refinery, which is very strange for a business of that magnitude, and a highly unusual and unprofessional practice in the oil and gas industry. This is actually the crux of the matter as the oil industry apparently operates differently from the cement and other industries where Mr. Dangote has been an experienced player for decades.
However, the Nigerian people are of any consideration in this equation, then It is in the best interest of Nigeria’s economy that the NNPCL, the NMDPRA, and the owners and management of the Dangote refinery sheath their swords and work together for the common good of the country. If that is the focus, it will be far too difficult to fight so publicly and so dirty. The opportunity of this massive Nigerian establishment must never be blown on the altars of ego and personal interest.
The job of any government is to create a conducive atmosphere for every business interest both local, foreign, public or private to thrive, and for a struggling economy which currently begs for foreign direct investments above all else, no ambassador is better positioned for that message at this moment, than Mr. Aliko Dangote, Inpsite of himself. He has been there, and against all odds, he has done that which others are too concerned, or too cautious to do. The NNPCL has to strategically increase its crude oil production to meet new demands. the company has to be intentional about this, it certainly isn’t a rocket science to achieve that, and that should be the log term focus.
That refinery, should be to the benefit of the NNPCL, the people and government of Nigeria, and of course the owners and management of the company, and this can only happen if national interest is the collective goal.
A sports team does not play or score goals against itself and still appear normal to spectators.
Following the marginal reduction of the pump prices of premium motor spirit (PMS) by the Dangote Petroleum Refinery and the Nigerian National Petrol Company Limited (NNPC Ltd), civil society groups have reacted by calling for further downward review.
Recall that the Dangote Petroleum Refinery had announced a partnership with MRS Oil and Gas to offer petrol at N935 per litre at retail outlets, while it reviewed the ex-depot price from N970 to N899.50 per litre.
The move, saw state oil major, the Nigeria National Petroleum Company peg its retail prices at N965/litre.
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However, the civil society groups are of the opinion that the price reduction, fall short of expectations.
According to the Chairman, Centre for Accountability and Open Leadership, Debo Adeniran, the reduced price of N935/litre was still expensive and unsatisfactory.
He pointed out that petrol was just one of the products coming out of crude and that both government and private business could still give out free petrol to citizens while making huge profits from the other products.
In his words, “Well, we believe that if NNPC and the private sector actually give out PMS for free, they will still not run their business at a loss, because the other derivatives of petroleum products can still serve them, and can still make them to break even. So, even at that N900 and something, it’s still expensive.
“Dangote has kind of mooted the idea that it could drop to as low as N650. And if he has mulled this, then it means that it is the state, it is the NNPC that will have been the clog in the wheel of such progress. And you know also that we expected that fuel prices, especially PMS prices, will drop below N200 when Dangote was expected to come on stream.
“So, it’s unfortunate that we are still talking about over N900 and they want us to jump up and rejoice for that. That is not satisfactory. They should just let us see the breakdown of their production cost and why it’s still there. I mean, there are countries like Libya under Gaddafi that gave out PMS for free and they didn’t run anything at any loss. So, I believe that it can still go further down.”
On his part, the Executive Director of the Civil Society Legislative Advocacy Centre, Ibrahim Rafsanjani, commended the reduction of fuel prices by the NNPC and Dangote, but said the government could still reduce the price.
“Dangote’s own is about N899 or something like that. Well first and foremost, we are happy that there is a little reduction in the prices. But also based on analysis and based on facts and evidences, we believe that it is possible for the Nigerian government to further reduce the prices.
“Because if a private company can reduce the price and it still makes profit, we wonder why government-owned enterprises cannot really pity its citizens,” he said.
The Central Bank of Nigeria (CBN) has announced a significant growth in the country’s economy, with a 3.46% increase in gross domestic product (GDP) in the third quarter of 2024.
This marks the third consecutive quarter of expansion, up from 3.19% in Q2 2024 and 2.54% in Q3 2023.
According to the newly published Q3 economic report, Nigeria’s GDP output rose to ₦20.115 trillion, reflecting a notable improvement from ₦18.285 trillion in the previous quarter.
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The CBN attributed this growth primarily to the performance of the non-oil sector, which grew by 3.37% compared to 2.80% in Q2 2024.
The report highlighted transportation, crop production, and other sub-sectors such as financial & insurance services, information & communication, trade, and real estate as major contributors to the expansion.
The non-oil sector accounted for 3.18 percentage points of the total growth rate.
“The expansion of the non-oil sector was driven by the performance of the financial & insurance, information & communication, crop production, trade, transportation & storage, and real estate sub-sectors,” the report stated.
Despite the economic growth, challenges persist. Inflation, particularly in food prices, remains a significant concern, standing at 39.93% as of November 2024.
Rising food and energy costs have also impacted transportation expenses, with intercity bus fares increasing by 20.23% year-on-year to ₦7,117.17 in July 2024, according to the National Bureau of Statistics.
Furthermore, the cost of petroleum, now exceeding ₦1,000 per litre, has driven up logistics and transportation expenses, adding pressure to households and businesses alike.
The CBN acknowledged these challenges, noting that the growth was achieved despite headwinds such as high inflation and rising operational costs.
Enhanced security measures in the Niger Delta have boosted domestic crude oil production, while restrictive monetary policies have helped moderate inflation in some areas.
“The growth recorded in the country is a result of continued efforts to improve the business environment, streamline cumbersome business processes, and deepen the quality of business infrastructure,” the CBN noted.
However, the report comes amid concerns over businesses exiting Nigeria due to persistent economic challenges.
Asharami Synergy, a leading downstream energy solutions provider, has demonstrated its commitment to community development and education by donating essential furniture to Gaskiya Junior School in Ijora, Lagos, Nigeria.
Biztellers reports that the social responsibility initiative was executed in collaboration with Sahara Group Foundation – the social impact vehicle of global energy conglomerate, Sahara Group.
It was gathered that the initiative is part of Asharami Synergy’s ongoing efforts to support education in communities.
The donation includes classroom desks and chairs for the JSS1 classes.
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CEO of Asharami Synergy, Nomnso Dike, said the project will create a more comfortable and functional learning environment and enhance student performance.
“We are delighted at the opportunity to support the attainment of Sustainable Development Goal (SDG) 4, which focuses on ensuring inclusive and equitable quality education. It has been a privilege to collaborate with the management and students of Gaskiya Junior School to deliver this project, and we look forward to future opportunities to enhance academic performance in this historic institution,” Dike said.
According to him, Asharami Synergy’s education-focused social impact initiatives have benefitted over 10,000 individuals. They focus on building capacity and providing the resources necessary to help students learn and grow sustainably.
“Education is the foundation of a brighter future, and at Asharami Synergy, we believe that every child deserves a learning environment that inspires and empowers them” he noted, adding, “This donation is not just about providing furniture; it’s a reminder to the students that their dreams are valid, and we are committed to helping them achieve their goals.”
Vice Principal Academic of Gaskiya Junior School, Sola Oladokun, commended Asharami Synergy for the donation, noting that it would inspire students to perform better with “increased concentration and fewer distractions”.
“These desks and chairs are a game-changer for our students. It’s heartwarming to see their excitement, and as teachers, we are equally thrilled because this will make teaching and learning more effective. We are incredibly grateful to Asharami Synergy and Sahara Group Foundation for this thoughtful intervention,” she added.
Two representatives of the students, Akin Moses and Chukwudi Gift, at the event said the donation would increase their “desire to dream bigger and concentrate better during lessons”.
Also speaking at the commissioning, COO at Asharami Synergy, Adekanmi Adesola, said, “What started as an opportunity to support the communities that host our operations has now come full circle. This donation directly impacts the lives of these students, and we are proud to bring smiles to the faces of the students and teachers.”
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