The business side of a commercial Nigerian National Petroleum Corporation (NNPC) acquiring stakes in Dangote Petroleum Refinery excites many downstream operators, it’s the political side that has their stomachs in a knot.
Mustapha Yakubu, NNPC’s chief operating officer, Refining and Petrochemicals, reportedly said discussions were already ongoing with the Dangote Group for the acquisition of a 20 percent stake at a two-day Nigeria Oil and Gas Opportunity Fair (NOGOF), 2021 conference.
Nigeria’s Federal government is committed to seeing the Dangote Refinery succeed. In 2019, Godwin Emiefile, the Central Bank governor announced a seed capital of N75billion ($300million) to the project valued at $12billion.
The argument is that if the 650,000 barrel per day crude refinery comes on stream, Nigeria will not just be self-sufficient in the production of refined petroleum products, but will become a net exporter of the products earning nothing less than $7.5 billion annually and saving the country billions of dollars.
However, the Nigerian government does not have immediate plans to privatise the NNPC as its shares will be owned 100 percent by the Federal Government in the proposed Petroleum Industry Bill (PIB).
The concern some operators who spoke to BusinessDay expressed is the possibility of political interference and the built-in risk that could dog supply of feedstock and uncompetitive regulation.
“At the end of the day we hope that the Refinery will be allowed to operate as a purely commercial entity without government interference,” said Adetunji Oyebanji, chairman of the Major Oil Marketers Association of Nigeria (MOMAN).
“Our experience is that the world over especially in Africa, once the government is involved, decisions become political. Personally, I would prefer that if equity has to be sold, it should be to the Nigerian investing public, this will ensure that the Refinery runs purely on a commercial basis,” he said.
Some speculate that the deal could see the NNPC supply the Dangote Refinery, its share of crude oil in the various joint venture agreements it has with oil companies, in exchange for equity in the refinery.
At any rate, “State control should be a thing of the past and we look forward to the full commercialisation of NNPC to fully benefit the Nigerian people as stakeholders, especially customers” said a senior executive in the oil sector.
The experience of the Nigerian government’s control of the refineries leaves a sour taste in the mouth. Lack of maintenance and vested interest in fuel importation has taken a toll on the refineries.
Nigeria has awarded the contract to rehabilitate the Port Harcourt Refineries at the cost of $1.5billion to subsidiaries of Italian multinational, Maire Tecnimont SPA, a leading EEPC company in the world – Tecnimont S.p.A. and Tecnimont Nigeria Ltd.
According to Timipre Syla, the minister of state for petroleum resources, the rehabilitation will occur in three phases, the first phase is to be completed in 18 months, which will take the refinery to a production of 90 percent of its nameplate capacity. The second phase is to be completed in 24 months and all the final stages will be completed in 44 months and consultations approved.
It is unclear why the NNPC is planning to buy stakes in the competition but many Nigerians will be grateful for a steady supply regardless of the source.
The 650,000 barrels per day (bpd) Dangote Refinery is expected to process a variety of light and medium grades of crude, including petrol and diesel as well as jet fuel and polypropylene.
It is designed to produce up to 50 million litres of petrol and 15 million litres of diesel a day, roughly 10.4 million tonnes of the product, 4.6 million tonnes of diesel, and 4 million tonnes of jet fuel per year, in addition to having a fertiliser plant, which will utilise the refinery by-products as raw materials.
