December 7, 2024
By Silverline Anozie
Industry stakeholders have called on President Bola Tinubu to wade into a likely showdown between Dangote Refinery and oil marketers over importation of fuel supply shortfalls that might affect the coming yuletide
This became indicative following fallout from meeting of oil industry stakeholders summoned by the Group Chief Executive Officer of Nigerian National Petroleum Company (NNPC) Limited, Mallam Mele Kyari on November 13. According to insider sources, aside the NNPCL GCEO, others in attendance include leadership of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Chief Executive Officers of Major Energies Marketers Association of Nigeria (MEMAN), representatives of Department of State Security (DSS), Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and Dangote Refinery, represented by Alhaji Sayyu Dantata.
Kyari in his opening remarks expressed optimism that majority of the challenges bedeviling the nation’s downstream sector could be solved with joint efforts of participants at the meeting. The meeting amongst other things dwelled extensively on finding long lasting solutions to the nation’s recurring fuel crisis as participants took turns to analyze in details the challenges and recommendations.
However, impeccable sources at the meeting confirmed that one of the major discoveries was an affirmation of the Dangote Refinery’s daily stock supply of 28 million litres of Premium Motor Spirit (PMS) as against the nation’s daily 48 million litres consumption leaving a supply gap of 20 million litres.
Recall that the Chief Executive Officer of NMDPRA, Farouk Ahmed at a recent event in Lagos affirmed that Nigeria’s daily petrol consumption stands between 45 million and 50 million litres. To avert consumption breakdown from the obvious 20 million supply shortfall from Dangote Refinery, NMDPRA at the meeting issued import licences to marketers to meet local demands.
As a follow-up to the first meeting, another meeting was again summoned last week Friday by the NNPCL GCEO. According to sources, the meeting reinforced the decision of the previous meeting and all participants at the first meeting attended, excerpt Dangote Refinery whose absence was neither communicated prior to or on the day of the meeting.
Sources at the second meeting confided in this medium that Dangote Refinery seems to have backed out from the decisions reached at the first meeting. According to them, Dangote Refinery is now demanding that NMDPRA guarantee its total crude oil requirement supply and that only it (Dangote Refinery) and NNPCL should be the importers of any shortfalls that may arise from the arrangement, contrary to the provisions of PIA.
Sources also established that the landing cost of imported fuel is cheaper than the price Dangote Refinery is offering, hence the Refinery’s N20 per litre reduction on petroleum pump prices. “The so-called N20 reduction only covers gantry loading, leaving out coastal loading, which is where the big volume loading is and the route preferred by Depot operators as it would ensure seamless distribution to all depots and stations throughout the country in record times. Depot owners who prefer coastal loading would run at a loss as the product would land at depots at a price higher than the cost of gantry loading,” the source said.
Meanwhile, industry watchers are of the view that the move by Dangote Refinery to back out of a peaceful pact aimed at strengthening the nation’s oil industry and save Nigerians from the usual end-of-year fuel crisis would have a consequential effect especially as yuletide approaches. “The Petroleum Industry Act (PIA) empowers the regulator (NMDPRA), to issue licenses to marketers to import shortage that may arise from local production of refined fuel as is the case with the Dangote Refinery production output. The PIA also limits the NNPC’s market share to 30% or less to prevent monopolistic practices. The meeting summoned by the NNPCL GCEO is timely and impactful for a stronger oil sector. If Dangote Refinery succeed in it’s attempt to impose its preference on the market and arm-twist the authorities to scuttle the PMS import arrangements already approved, the Nigerian people who are mostly at the receiving end will suffer the consequences. President Tinubu and NMDPRA should do the needful and avoid another round of bleak yuletide for majority of Nigerians who have diligently endured the pains of fuel subsidy removal by ensuring that the arrangement as led by NNPCL GCEO is allowed to stand and take full effect,” an oil industry stakeholder said.
*Ms Anozie is a Senior Energy Correspondent with Energy & Business Media
