The Nigerian National Petroleum Corporation transitioned into a limited liability company with a humongous share capital of 200 Billion Naira Share Capital, with the Federal Ministry of Finance and Petroleum Resources Ministry counterpart owning 50% shares apiece.
From the date of this incorporation, the old Nigeria National Petroleum Corporation having the status of a behemoth solely under the whims and caprices of the President of the Federal Republic of Nigeria, established 1st July, 1977, was laid to rest. The newly born NNPC is to be governed by the provisions of the Companies and Allied Matters Act (CAMA). It became a corporation who must yearly submit it’s audited account not only to its shareholders but must also file same at the registry of the Corporate Affairs Commission (CAC) and for two years running the management of the company has complied with the law, which is a far cry from what it had always been before it was made to shed away the invincible and opaque cloak of its former self.
The pricing of petrol has always been a heady one in Nigeria right from the days of Military rule down to the democratic journey that the Country have embarked upon since 1999. The petrol pump price per litre have been always been a war between the government in power and the masses. The Federal Government, through NNPC or other statutory bodies, have applied regimes of subsidy to cushion the effect of petrol price increase on Nigerians.
In fact, it got to the point that the subsidy regime became over the years a sore point that enabled looting vagabonds to swell like a locust devouring beast against the common patrimony of all Nigerians. A looting spree through the subsidy regime was unleashed on Nigerians and finally, on the 29th of May 2023, President Bola Tinubu was able to finally do away with fuel subsidy payments, that was a loose fund for various miscreants to loot to their fill.
Thereafter, the lot fell on NNPC as a limited liability company to manage the import and distribution of petrol and it’s pricing. After the removal of subsidy in May 2023, the price of petrol skyrocketed from about ₦190 Naira to about ₦650 Naira, yet the news out there on the street is that the landing cost of petrol is about ₦1,100 Naira per litre. Then, how come Nigerians were able to buy at ₦650 Naira ? That is, at a shortfall of a whopping ₦450 Naira !
Most people chorused that the petrol subsidy payment regime to some cabals was still on without the knowledge of Nigerians. This was a story that was moving at an unconscious wave length within the Country until the dawning of the Dangote Refinery Limited (DRL) in the Nigerian petrol market on the 15th of September 2024.
Let us at this juncture examine how DRL came into being in order for us to better appreciate the scenario. Dangote Refinery (DRL) got commissioned by former President Muhammadu Buhari on May 22, 2023 after work started on site sometime in 2016.
The DRL is located in the Lekki Free Trade Zone of Lagos State and therefore enjoys all the perquisites attributable to any enterprise sited within a Free Trade Zone in Nigeria. Such perquisites under SECTION 8 of the Nigeria Export Processing Zones Authority Act (NEPZA) provides that, “approved enterprises operating within a zone shall be exempted from all Federal Government and State taxes, rates and levies”. SECTION 18 (1) of the same law further provides that all legislative provisions pertaining to taxes shall not apply within the free zone.
So, siting a company in any of the Free Trade Zones is of huge benefit to any manufacturer or industrialist and so, DRL was sited by its promoter, Dangote Industries Ltd, at the Lekki Free Trade Zone in Lagos State.
Present at the commissioning of Dangote Refinery was the former Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, who gave some insights into how the DRL was able to see the light of the day and not become a mere mirage.
The initial cost for DRL to become a going concern was first put at $9 Billion Dollars before unforeseen circumstances coupled with, may be, other additions to design and development, skyrocketed the cost to roughly $20 Billion Dollars.
Sometime in 2021, the former CBN Governor paid a visit to the then fledgling construction site of DRL and promised that the Federal Government of Nigeria will do all in it’s power to see that the refinery comes into completion and that became a reality in May 2023.
At the commissioning, Mr Godwin Emefiele said the equity pumped into the project had fifty percent (50%) provided by Alhaji Aliko Dangote, the President of DRL and the remaining fifty percent (50%) of the cost was by debt financing by Banks.
In fact the former CBN Governor affirmed that; *” ..The CBN partnered with the Dangote Group in ensuring the successful completion of the Dangote Refinery project by providing about N125 Billion, to cover domestic currency requirements for the venture”* He went further and said at the DRL commissioning that, *” I must… appreciate all the participating local Nigerian Banks who did not only partner with the project through effective financing but were keenly aware of the importance of the project for our nation”*, and continuing the CBN number one then concluded, *”They (Nigerian Banks) provided immense support and exceptional understanding, even when interest payments and principal repayment had fallen due”* !
In short, the above insight by the former Governor of the CBN showed that Nigerian institutions, both public and private, gave everything within their power to see that Dangote Refinery project became a reality.
Not only did the CBN and other Nigerian Banks come to the rescue of Dangote Group in relation to getting the refinery project to completion, the Nigeria National Petroleum Corporation (NNPC), which was also doing a turn around maintenance on it’s own refineries, went on to put out a hand of fellowship and took a 7.2% stake of about $1 Billion Dollars from the shares of Dangote Refinery.
That is a first of its kind in Nigeria for a competitor to invest such a huge amount in the birth of a company that is meant to virtually compete with its own business. Such a great vision and foresight can only come from a management that understands the nitty gritty of the nature of the business in question, even at a period when the refinery have not yet been completed. The masterstroke of such a brilliant vision is that a competitor like DRL may at the end of the day help, through its refining, bring down the price of petrol and thereby further alleviate the poverty gallivanting within our Country, against our people.
The mantra one can deduce from this is that NNPC had all it’s hands on the deck that the Dangote Refinery must see the light of the day by all legal means possible and so it happened.
The DRL promised to roll out it’s petrol products within months after this commissioning but Nigerians waited from May 2023 until September 15, 2024 before they could feel the coming on board of DRL.
DRL, through its President, announced its arrival at a press briefing where he said that the price of petrol pump price per litre will have to be decided by the highest decision making body in Nigeria, that is, the Federal Executive Council (FEC), headed by President Tinubu.
At this point, I had my apprehensions whether what most Nigerians were expecting of a fall in petrol price was not an expectation in futility. A sort of an hope dashed. Yet, Nigerians waited in baited breath for when the DRL petrol price will come into being.
First to be noted is that DRL have a refining capacity of 650,000 barrels per day (BPD) and Nigeria’s total oil output is reported to be around 1.3 million barrels per day approaching 1.6 million barrels.
The question then was how DRL will be able to get it’s oil, wholly from this total oil output, taking into consideration that the International Oil Companies (IOC) and NNPC will definitely have contractual obligations dating far behind when DRL came on board despite the provision of SECTION 109 of the Petroleum Industry Act (PIA) that provides that local refineries be given priority for crude sale before exports. How will DRL get it’s crude if it had not secured a contract for such prior to it’s completion ?
That herculean impasse that would have dragged back the expectation of Nigerians and which seemingly could have giving the owners of DRL some sleepless nights, got settled when President Tinubu waded in, that NNPC should sell crude to DRL immediately and that the sale should be in Naira instead of the usual established practice of sale of crude oil in dollars.
Therefore, according to the Executive Vice President of NNPC, Mr Adedapo Segun, the NNPC had supplied DRL 30 Million Barrels of crude oil with an additional supply of 6.3 Million Barrels slated for September and 11.3 Million Barrels slated for October, 2024. In fact, the Presidential Committee for Crude sales in Naira, headed by the Minister of Finance, Mr Wale Edun, just announced about a day ago that DRL will be granted that option of purchasing in Naira a determined amount of crude for the next 6 months.
Thereby, the yearning of DRL for crude from Nigeria, to a large extent, is presently being satisfied by NNPC. DRL thereafter decided to roll out the sale of petrol from the 15th of September, 2023.
Majority of Nigerians, including my humble self, was solidly behind Dangote Refinery, thinking that an amorphous cabal was not going to let us enjoy the low price and quality of petrol that DRL was about to bring into the Nigerian market, by denying it the necessary feedstock of crude oil needed for refining.
After all said and done, the D-Day for petrol roll out by DRL gradually dawned and boom from the blues, NNPC as the sole off taker announced that DRL has sold petrol to it at a cost of N898 Naira per litre, while the imported pump price for imported petrol that Nigerians were buying as at then was just N858 Naira per litre.
A humongous difference of N40 Naira per litre !
Nigerians, including my humble self, were totally dejected and downcast.
Our expectation was suddenly dashed on the rocks !
In hushed tones around corners within the nooks and crannies of Nigeria was the talk that the cabals that Alhaji Aliko Dangote was speaking about, who were refining low quality petrol from Malta, had hijacked the pricing of petrol and thrown Nigerians further into poverty and abject squalor.
The voice of Nigerians was so vehement against the government and NNPC as
the two were seen as vampires sucking economic life out of hapless Nigerians.
Fortunately, DRL came out and told Nigerians that NNPC was lying to Nigerians that it had sold petrol to NNPC at N898 per litre.
DRL said that the petrol they were selling to NNPC was derived from crude oil that they had bought in dollars but very funny enough, it kept quiet on how much exactly it sold the petrol per litre to NNPC.
So, the question arises: How much did DRL sell it’s petrol per litre to NNPC ? DRL can’t afford to be quiet over this. A manufacturer shouldn’t keep quiet over what the price of it’s product is.
Failure of DRL to tell Nigerians of how much exactly it’s petrol per litre is, leads one to some conclusions; first, that it may seem that DRL is using NNPC as a bull whip against Nigerians.
Secondly, DRL, by it’s silence is giving acquiescence to the present rumour that the high cost of petrol per litre, even higher than imported one’s, is caused by it and not NNPC.
Thirdly, is the presupposition that DRL may be using the government and NNPC as a blind front, in order to perpetrate itself as a monopoly within the refining and petrol distribution subsector of the oil industry.
Pundits are pointing to the role of Dangote Industries in other vital sectors of the economy.
Fourth, is that, what one can deduce from DRL’s silence is that it’s owners are not giving back to Nigerians the sort of backing and support that Nigerians, especially various governments and NNPC, had given DRL in order for it to become a reality and a functional entity.
The fifth assumption that can be deduced, is that DRL is helping in opening the eyes of Nigerians to the fact that NNPC has really been a positive entity that has helped in alleviating the poverty of Nigerians as devoid from the commonly held notion that it’s just an economic behemoth good for nothing.
We now know that the 7.2 % shares stake hold, taken out of the commonwealth of Nigerians, is part of what has helped DRL to get completed.
Also, we are able to know, through the Executive Vice President, Finance, Alhaji Umar Ajiya, that NNPC covered about N7.8 Trillion Naira shortfall of the price that Nigerians would have paid for petrol, within the first seven (7) months of this year. This was reported by Punch Newspapers edition of 26th of August, 2024.
Some few days ago, the President of IPMAN vouched publicly that NNPC refinery at Port Harcourt is undergoing final efforts at completing maintenance before the refinery starts to pump out petrol and it’s other allied products to Nigerians.
I will plead with NNPC to double down on it’s efforts, in order to see that competition within the refining sector of the oil and gas industry is revved up by completing the turn around maintenance of our refineries in order not to foist a monopoly, with it’s attendant high prices, on Nigerians.
I will also plead with NMDPRA that they should do more in seeing that a monopoly is not entrenched on Nigerians in the refining of oil or it’s distribution sector of the economy.
Nigerians cannot afford to be priced out of existence just because a private refinery has been set up in Nigeria.
We plead, that if importation of petrol will bring down the price of petrol for now, then we should let independent marketers who can so do to embark on it, provided quality is not compromised.
This plea is necessary because of the fact, that from the news coming from the usual salvos that has become constant between two entities that are supposed to be shareholders in DRL, a shortfall of 25 Million litres of petrol supply to NNPC and other marketers from DRL is a present going concern that may lead to another round of petrol scarcity that may destabilise the Nigerian economy because as we understand, the NNPC Trading have no authority to again import petroleum.
The seeming overwhelming act of loading from DRL’s gantry seems not to be performing the necessary magic except vessel loading of Petrol is immediately embarked upon through the space which we believe DRL should possess, judging by the location occupied by the refinery.
In conclusion, our plea and demand are the following as stated hereunder to Alhaji Aliko Dangote and DRL.
First, we plead that the hope of Nigerians and their support in the siting and establishment of DRL in Nigeria as the hope of our Nation, should not be allowed to be dashed.
We do assume that the personnel cost and other means of production by DRL will not be as high as that of foreign refineries, coupled with the fact that what can be regarded as the major raw material for refining is gotten from DRL’s backyard and that should serve as one of the determinants in deciding cost of petrol that comes out of DRL.
Secondly is the fact as earlier pointed out at the beginning of this write up, that, as DRL is located in a Free Trade Zone, it entitles the company to tax exemptions and as such, that should reflect in it’s pricing.
This facts and more, should be considered by DRL as they tell Nigerians how much exactly that they are selling petrol per litre to NNPC and if high as announced by NNPC, it should for the sake of integrity, equity and good conscience, while not throwing away business considerations, help reduce the price of petrol and thereby relieve the yoke of poverty on the hunched back of fellow Nigerians.
Femi Oniyide Esq.
08036877692
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