Filled with patriotism, flummoxed by anger, yet motivated by the plight of the common man – and today even the not-so-common man; I’m penning this as a dumbfounded Nigerian who is finding it quite difficult to wrap his head around the non-musical tango between Dangote Refinery (DR) and NNPC Ltd.
Aliko Dangote, at an Afreximbank event disclosed that the cabal in the oil sector is much more dangerous than the cabals in the drug business or drug cartels. He was speaking from experience as he navigated the murky waters of the oil industry while developing his refinery. Drug cartels are registered criminals and there are no secrets about the hideous and unlawful businesses they run.
But the cabals. They are wolves in sheep’s clothing, yet pretending to herd a flock to safety. The tango between NNPC Ltd and DR has unearthed the face, the methods and the grand scheme of the oil cabals. They are a blend of IOCs, regulators and marketers. All three came for the head of the DR as it entered the oil market. It had come for their golden fleece, from which they continue to fleece the generality of Nigerians.
The IOCs came for DR, they wouldn’t give the company crude, or would sell exorbitantly to them. They claimed contractual agreements to foreign buyers while breaking our laws that spell out prioritised sales to our local refineries. Then the regulators in the form of NMDPRA (Nigeria Midstream & Downstream Petroleum Regulatory Authority) came for him, berating his refinery, the quality of his products, and even the legality of his operations. The National Assembly went on a fact-finding mission. DR was of unbelievable standards and so were its products. The federal government waded in with the petroleum minister of state’s adjudication/reconciliation meetings. Mr. President wielded the big stick and in council, directed that NNPC Ltd sells crude to DR in naira. DR is to also sell its products locally in naira. I gather that the presidential directive on the crude sale in naira is to start in October or so. After all the bottlenecks, the hitches, the hurdles and the triathlon with the top guns in the oil industry i.e IOCs and NMDPRA, DR is set to roll out PMS, the liquid gold of the Nigerian economy.
One would have thought that was the end of it but oh no, another hurdle manifested. Price! And then another hitch also to stumble the rollout as NNPC Ltd was set to be the sole distributor of the PMS. Then another merry-go-round as to the pricing and offtake of the products. DR said it was waiting on NNPC Ltd. Then NNPC says DR is on its own. Price is to be market-determined, and any marketer can buy the products. It isn’t so clear yet whether NNPC Ltd would be the sole distributor. While the product is ready, the politicking in the oil industry has refused to allow us to “taste the sweetness” and appreciate the clearness of DR’s PMS. Unwittingly, all the rigmarole and cabal-manufactured setbacks have shed more light on what is really going on in the industry and why the common man and even the uncomman man continue to queue up for fuel, and buy at exorbitant prices, peaking at N1,300 in some states.
When DR forayed into the diesel and jet fuel market, they met diesel at N1,700. They then upset the market and made it cheaper, to as low as N900, N1,000 and eventually around N1,200 per litre. While it is more affordable for you and me, it was bad business for the marketers. They weren’t fleecing us as they ought to with DR’s price. Devakumar V.G Edwin, Vice President Oil & Gas at DR, has revealed that this upset in price was not received well by the marketers as they went as far as writing a letter to Mr. President, to complain.
They boycotted DR’s diesel and jet fuel and opted to buy the more expensive and less qualitative imported fuels. Only small traders are buying from DR and their purchase is a measly 3% of the 54 million litres that DR can produce daily, provided there’s the availability of crude. It means that where DR to inject PMS into the Nigerian market, there would be a 60% decrease in the price of PMS, just as it was with the supply of diesel and jet fuel. It may not be up to, but there will definitely be a decrease. This is what the marketers’ arm of the cabal and the remaining oil cabals fear and do not want. They want more exorbitant prices, more forex thrown at them at only God knows what rates to import, and import. billions of dollars, not less than N3 billion was spent on importing PMS in six months. N5.8 trillion worth of PMS has been imported in only the first six months of 2024. The PMS import business is the largest in the country. The forex involvement is also the biggest in the country. Those on the end of this draining pipe will do all it takes to keep it flowing. That is the quandary we are jam-locked in. We witnessed a sudden rise in the prices of PMS from N600 plus to N800 plus at NNPC/OVH outlets.
There was no announcement. The petroleum minister has said that they never authorised any price increments. So why the increment? Is it to force the hand of the PMS price from DR? After all the 600 plus naira price is understood to be ‘regulated’ (not ‘subsidised’) by NNPC. It means that NNPC might try to regulate the price of the DR PMS, meaning some persons may still be enjoying “regulation” money. Some industry experts are claiming that NNPC Ltd has agreements in place with foreign plants and are stuck with contractual PMS till about the end of the year, hence the azonto dance around DR’s PMS rollout. The situation is a bit sketchy but the picture is very clear. Those exporting the crude are making a kill. Those importing the products are also making a kill. Finally, those selling locally are making another kill. It’s a vicious “killing” circle. All on top of our common and not-so-common heads. The regulators? Hmm. Tufiakwa! Cabals in chief.
In the midst of all this, the DR vice president has also revealed that NNPC wants to have about 10 personnel permanently stationed at DR to monitor the DR processes since they would be supplying the crude and buying back the products in naira. At the end of the day, NNPC would be buying off the PMS right? The back and forth continues. But why does a regulator want to station permanently like that? Is this what is available worldwide? Aren’t there estimates of expected products from quantities of crude refined as monitoring guides? This dovetail into the DR’s operations is quite unsettling. They should have completed their 20% buy-in of the refinery in the first place and should have prepared for the reality of a functional independent refinery this huge. Evidently, this $20 billion investment is proving to be too big and too blessed to be caballed out of the game. Interestingly Dangote is ready to bear the loss of buying and selling in naira as the exchange rate plummets. Now we wait, pray and see.
