Explainer: Separating fact from fiction in NMDPRA’s claims against Dangote refinery

The celebration surrounding Aliko Dangote’s monumental $20 billion refinery project in Nigeria appears to be hitting some snags as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has announced that the Dangote Refinery is still in the pre-commissioning phase and has not yet received its license.

Farouk Ahmed, chief executive officer of NMDPRA, on Thursday, July 18, expressed concerns about the supply of petroleum products across the country.

“Well, just like you rightly asked, there are lots of concerns about the supply of petroleum products nationwide and the claims by some media houses that we were trying to scuttle Dangote refinery; that is not so,” he said.

Read also: Dangote refinery not yet licensed to operate in Nigeria-NMDPRA

NMDPRA’s claim

Ahmed said the Dangote refinery is still in the pre-commissioning stage.

“It has not been licensed yet. We have not licensed them yet. I think they are at about 45 percent completion. So we cannot rely heavily on one refinery to feed the nation because Dangote is requesting that we should suspend or stop all importation of petroleum products, especially Automotive Gas Oil, AGO, or jet kero and direct all marketers to the refinery,” Ahmed said.

Ahmed noted that this situation is detrimental to the nation’s energy security and also harmful to the market due to the potential for monopolistic practices.

“So, in terms of quality, currently, the AGO quality in terms of sulphur is the lowest as far as West Africa’s requirement of 50 ppm,” he said.

“Dangote refinery as well as some major refineries like Waltersmith refinery, produce between 650 to 1200 ppm. So, in terms of quality, their quality is much more inferior to the imported quality.”

Dangote’s claim

The Dangote Group in April described the allegation as false, baseless, and mischievous, stating that its refinery is designed to produce the highest quality petroleum products that meet very stringent international specifications.

Anthony Chiejina, the company’s spokesperson, made available to newsmen, stressed that “publications indicating that we are producing high sulphur diesel are mischievous and designed to tarnish the image of our reputable organisation.”

“Until late last year, diesel imports into Nigeria were up to 7,000 parts per million (ppm) of sulphur which has been going on for many years. Our diesel is produced currently at significantly lower levels of sulphur; as such, we find baseless the allegation that the reason for the reduction is linked to quality. What we are producing is 80% better than what is being imported into the country,” Chiejina said.

Experts view

Kelvin Emmanuel, an energy expert said NMDPRA has officials who stay with refinery for 12 months to check the entire system from mechanical to electrical and monitor the processes.

“After 6 months of testing wet production, they issue them a provisional acceptance certificate for a license to operate. After 12 months, they issue them a final acceptance certificate for license to operate — that test is currently nearing 180 days for PAC,” Emmanuel said.

He added, “Wet production test for pre-commissioning doesn’t mean the refinery is not already in production, it means the refinery is not yet functioning at full capacity utilization yet”.

“The very fact that the condensation distillation unit has not fully gone into effect is the reason his diesel is currently producing 150-200 parts per million in terms of sulphur content—that will drop to below 50 ppm when all the centrifuges come into operation. It’s utterly disappointing that the NMDPRA chief in trying to sell a narrative, will attempt to de-market the refinery and mislead the public,” Emmanuel said.

Jide Pratt, country manager at Trade Grid and an energy analyst, said “Didn’t this same agency give a waiver? why did the agency allow sales into the open market then? or they are unaware the refinery is selling?

He added, “Why is the Port Harcourt refinery that is technically complete not selling and a 45 percent refinery is selling? Until the President decides to sort out the anomalies in this sector, nothing will change”.