Petrol Marketers Lose Billions Of Naira To PMS Import Substitution

Petroleum marketers are currently losing several billions of Naira as a result of the  import substitution of Premium Motor Spirit (PMS) despite expanded in-country refining capacity, among others, it was learnt.

To this end, key petroleum products marketers are worried and anxious about the level of decay of depots constructed with billions of Naira.

LEADERSHIP reports that critical evacuation infrastructures which existed prior to coming on stream of Dangote refinery have been allowed to rot away. A visit to most tank farms at Apapa by our Correspondent showed minimal signs of activities as petrol tankers that usually line up for loading appear to have fizzled out.

Information gathered by our Correspondent shows that a significant stockpile of refined petroleum products at Dangote refinery is as a result of abandonment of existing distribution infrastructure across the country.

Speaking with LEADERSHIP, the chairman, Board of Trustee, Crude Oil Refinery Association of Nigeria and CEO, Eko Refineries & Integrated Oil, Capt. Emmanuel Iheanacho expressed concerns about the way existing evacuation facilities in the country were abandoned by Dangote.

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According to him, most of the existing facilities both in Lagos and elsewhere have more loading gantries than what exists at Dangote refinery. “I was thinking that at the start of the refinery the Dangote Group should have keyed into and or inherit existing facilities that served as critical evacuation centers when refineries operated by the Nigerian National Petroleum Company Limited (NNPC) would have been taken into account for effectiveness of supply” he said.

Iheanacho opined that, though Dangote refinery is a major asset and primary source for refined petroleum products, nonetheless its evacuation facilities are limited to distribute the quantum of products from the refinery.

He further explained that, if the refinery should consider the supply chain assets and all depots are taken into consideration as effective disposal infrastructure the level of unevacuated storage would be significantly high. Also, speaking on reported importation of petrol into the country, he said the decision is based on demand and supply.

Import substitution is considered to close the demand gap and shouldn’t be seen as a controversial decision, he added.

Lending his voice on this, the president of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Billy Gillis-Harry said, the decision to grant importation rights is a breach of agreement between the marketers and the regulatory authorities.

Gillis-Harry pointed out that, first consideration should be on locally refined products as a way of encouraging private investments and also implementation of local content in the refining space.

He said his group is anxious to promote private investment, ensure proper restructuring of the downstream market to engender competition and efficiency.

According to him, availability and affordability of petroleum products should be a key policy direction of the government and as marketers they have the responsibility to promote sustainable growth and investment in the sector.

These reactions are coming following reports that large scale importation of petrol still occurs in Nigeria following inadequacy of in-country refining capacity. Reports stated that, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NDMPRA) has said that the country’s three operational refineries contribute less than 50 per cent of the nation’s daily petrol consumption.

According to the regulator, despite having refining capacity of 985,000 barrels per day, by the three operational refining plants, the significant shortfall is augmented with importation.

The agency said, Nigerians currently consume 50 million litres of petrol daily.

The NMDPRA chief executive, Farouk Ahmed, represented by the executive director, Distribution System, Storage and Retailing Infrastructure, Ogbugo Ukoha, made this disclosure in a press briefing in Abuja.

He noted that, the agency, operating under the provisions of the Petroleum Industry Act 2021, has been granting import licences, emphasising that without these imports, there would have been a fuel shortage.

In 2024, two refineries, the 60,000 barrels per day capacity old Port Harcourt refinery, and the 125,000bpd Warri refinery, operated by the Nigerian National Petroleum Company Limited (NNPCL), began operations after decades of being offline. Earlier in the year, the 650,000bpd Dangote refinery also commenced operations to the delight of Nigerians.

Just at the weekend, President of Dangote Industries Limited (DIL), Aliko Dangote, revealed that his Petroleum Refinery has enough Premium Motor Spirit (PMS otherwise known as petrol) in storage to sufficiently meet the local needs of Nigeria. Dangote disclosed that the oil refinery has ‘more than half a billion litres of petroleum and over 600 billion Naira worth of products in its tanks.

Dangote said, “…as we speak right now we have more than half a billion litres. The Refinery is producing enough refined products, like gasoline, diesel, and kerosene, to meet 100 per cent of Nigeria’s requirements.”

Speaking after a tour of the Refinery complex by a Zambia Government delegation, led by the country’s minister of Energy, Makozo Chikote, Dangote stated that the refinery project, like other projects in the past, is not for Nigeria alone.

“This refinery is not only for Nigeria; it is for Africa. We must sustain the African Continental Free Trade Area (AfCFTA) deal. We are trying to see how we trade with other African countries

The Zambian minister of Energy said, his takeaway from the Dangote Refinery working visit was that the President, Aliko Dangote, is truly focused on the bigger picture for Africa. Chikote, who led a delegation of energy experts to the Dangote Petroleum Refinery to partner Zambia on energy solutions, expressed satisfaction and readiness to work with the African manufacturing giant.

After a tour of the Dangote complex at the Free Trade Zone, Ibeju Lekki, starting from the Single Point Mooring to the Dangote Jetty, the biggest fertiliser plant in Africa and the 650,000bpd largest single-train refinery in the world, the Minister enthused that the presentation by the Vice President, Oil and Gas of Dangote Industries Limited, Mr. Edwin Devakumar, made their hearts “jump”. He stated that the presentation speaks to the challenges of his country, Zambia.

The vice president of Dangote Industries Limited, Edwin Devakumar stated that the Refinery produces the best quality products as its core business strategy.

“The project concept was to process the crude from Nigeria and add value. But we also wanted to provide some flexibility to process most of the African crudes and some of the Middle Eastern crudes,” Edwin said.

He added that,  “in another concept, what we did was maximum value extraction. That is a process where every barrel of crude which goes in, the value addition should be the best.”

According to Edwin, “the Refinery can meet all our requirements. 44 per cent can meet the entire requirements of Nigeria, and 56 per cent of the production would be exported. Every day, we produce lighter products of 104 million litres; 57 million litres of petrol every day; 20 million litres of jet fuel; and 27 million litres of diesel production.