By Dr. Tayo Douglas, Esq.; Ph.D
Ever since the face off or sharp disagreement between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refinery (DR) came to light, several writers have continued to inundate the public with all manner of stories and articles in the media. While some writers have been objective in their analysis, some have nilly-willy descended into the arena and have by so doing failed or refused to appreciate the causa proxima. Interestingly, the contributions of those who would not want to see anything good about NNPCL nor its statutory roles are worthy of examination with tooth comb. At a stretch, these sets of writers have in their various opinions vaguely surmised that NNPCL has refused to supply or sell crude oil to DR contrary to the existing agreement between the two parties. In another stretch, the story is that NNPCL wanted to be the sole company who would buy off Premium Motor Spirit (PMS) and other allied or refined products from DR and then resell to other marketers. It is in the light of the foregoing suppositions that the NNPCL has been painted to the public without having recourse to the other side of the story.
Assuming, but without conceding, that the foregoing are the facts, then it is necessary to examine those supposed facts in line with the statutory provisions to be able to determine the culpability of NNPCL, if any. For a start, the Statutory Instrument (SI), which for the sake of emphasis, controls the activities of NNPCL is the Petroleum Industry Act 2021. It is this Instrument which dictates and determines the objectives, functions and duties of NNPCL. Given a careful perusal of sections 64, 66 and 67 of this Act, the facts are revealed to anyone whether NNPCL has in the course of its transactions with DR flouted any of the provisions of the Act or not. If the self-serving opinions of some writers and commentators are that NNPCL has infracted in its dealing with DR by not supplying or selling crude oil to DR at a local currency, they should please have a rethink. In the provisions of this Act, NNPCL is mandated to sell crude oil to both local and international buyers. Nothing in the Act states that NNPCL must sell to either local or international buyers in local currency. It is shameful that majority of writers or public analysts would not have read the contents of any agreement or statutes before coming out to write or express opinions on a topic which is clearly not within their knowledge. If the President, like they have alleged, has intervened in the matter and has instructed NNPCL to sell crude oil to DR in local currency, does that mean that hitherto, NNPCL has not acted in line with its statutory duties ?
In addressing the second accusation which they have alleged that NNPCL wanted to be the sole buyer of PMS and other refined products from DR, it will be appropriate to explain the meaning of the word “off-take.” In any business, be it oil and gas or any other productive or manufacturing ventures, off-take contract is a global standard practice. In the case of oil and gas, it is an agreement where the buyer (off-taker) agrees to buy all or major portion of the refinery products and then resell to either marketers or consumers. This mechanism is often deployed, in particular in any fledgling economy or market, to put in check various irregularities which may arise as a result of leaving the particular product at the mercy of either the producer or various retailers. The question to now ask is whether NNPCL is mandated to undertake this course or not ? Section 67 of the Act leaves no one in doubt that NNPCL is more than fortified to undertake this transaction in so far as it is done under the principles of good governance, transparency and sustainability. By the way, has NNPCL not been paying subsidy in the past to enable the consumers have access to an affordable and available fuel price ? What has happened since its withdrawal of this same subsidy? Has the unregulated oil market remain the same till now and what has become the experience of the helpless consumers ? Now that the NNPCL has decided to withdraw from the offtake contract, let’s then await what would become the lot of the oil markets and the consumers.
Federal Government’s decision on the sale of 450,000 allocated barrels of crude oil in local currency to the local refineries and not DR alone is not without its purpose. This is to stabilize the pump price of refined fuel and to make it affordable to the consumers. Besides, it is also a decision taken to erase the pressure on the foreign exchange and to also drive energy security, that is, energy availability and affordability. It can be safely stated that this decision is in itself an incentive or subsidy to be enjoyed by the local refineries which at the moment will only be enjoyed by DR. Given the antecedents of the promoters of DR refinery in other essential ventures which have continued to enjoy Government incentives and/or subsidies, has there been any relief to the masses or the consumers? Has the purpose of those incentives or subsidies not been defeated and how are we sure that leaving these people as the sole determinants of oil market would also not spell doom for the masses ? What is the assurance that there would not be artificial scarcity purposely created to encourage sharp practice of high or outrageous cost of fuel pump price ? These are the facts or questions which we are all invited to consider before calling for the head of NNPCL.
SGD. –
Dr. Tayo Douglas, Esq.; LL.B (Hons); B.L: LL.M; Ph.D
Tel: 08033600286
Email: papatee19@gmail.com
8th October, 2024
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