DANGOTE Petrochemical refinery owned by Africa’s richest man-Aliko Dangote is set to disrupt Nigeria’s premium motor spirit (PMS) price-control regime, and sell at a market-reflective price, The ICIR findings have shown.
Dangote said the Nigeria National Petroleum Company Limited (NNPCL) does not own a 20 per cent share in his company because of failure to fulfil certain payment obligations.
The NNPCL has maintained a price-controlled regime in the pricing of petroleum products, being the sole importer, however, Dangote is gradually taking the market by storm with recent PMS supply commencement announcements.
The NNPCL price-control regime has seen PMS sold at a controlled price of between N600 per litre despite deregulation, and has failed to solve fuel supply concerns as fuel scarcity resurfaced in several parts of the country.
Marketers, The ICIR learned have commenced registering to purchase products from the refinery with the announcement of the official kick-off.
In the latest twist of the event on Sunday, July 14, the chief executive officer (CEO) of Dangote Refinery, Aliko Dangote, announced that the Nigerian National Petroleum Corporation (NNPC) Limited no longer owns a 20 per cent stake in Dangote Refinery.
Questions had earlier arisen when Dangote started sourcing his crude from the United States of America, despite NNPCL’s supposed 20 per cent stake in the refinery.
However, the business mogul revealed that the Nigerian oil company now owns only 7.2 per cent of the refinery due to the NNPC’s failure to pay the balance of their share, which was due last month in June.
He stated that while the NNPCL had promised to provide the funds, it has been unable to meet its obligations, thus reducing its stake in the $19 billion refinery to 7.2 per cent
“NNPC no longer owns a 20 per cent stake in the Dangote refinery. They were met to pay their balance in June, but have yet to fulfill the obligations. Now, they only own a 7.2 per cent stake in the refinery,” Dangote said.
The NNPCL’s opaque practice and not running as a full commercial business despite deregulation puts the national oil company in a tight spot.
Recently, the ICIR reported efforts by the corporation to source $ 2 billion from international lenders via crude-for-swap loans.
This need could have been sourced without borrowing, energy analysts say, if the NNPCL had enlisted in the capital market instead of resource-backed loans.
Earlier, the NNPCL had sourced $3.3 billion from Afrexim bank, as it continues to lose a large chunk of its oil resources to oil theft.
The NNPCL chief operating officer, Refining and Petrochemicals, Mustapha Yakubu, said this plan to own share in Dangote’s refinery is to secure Nigeria’s place in the massive project, making it resource-dependent.
He said this is part of the then government’s plan to work with private oil companies to safeguard the country’s energy security without undermining the plans to rehabilitate its refineries.
Notably, recent data sourced from NNPCL released an audited financial report for 2022 show that the national oil company borrowed $1.3 billion to acquire the stake.
While giving further insight, Dangote, said the company has only paid enough to acquire 7.2 per cent of the refinery and has failed to fulfill its obligations that were due last month.
The Dangote Refinery is a massive oil project located in the Lekki Free Zone, Lagos, Nigeria, boasting a capacity of 650,000 barrels per day (BPD). Owned by the Dangote Group, it aims to become Africa’s largest oil refinery and the world’s biggest single-train facility.
The refinery is expected to generate 9,500 direct jobs and an additional 25,000 indirect jobs, providing a substantial economic boost to the region.
Once fully operational, the refinery will produce approximately 50 million liters of petrol and 15 million litres of diesel daily, equating to 10.4 million tonnes of petroleum products annually.
It will also yield 4.6 million tonnes of diesel and 4 million tonnes of jet fuel per year. Moreover, the facility includes a fertilizer plant that will utilize by-products from the refinery as raw materials, further enhancing its economic and environmental impact.
Commenting on controlling the PMS market pricing, the oil sector governance expert, Henry Ademola Adigun, told The ICIR that Dangote would disrupt the price-pegging by the NNPC and sell at a market-reflective price since he’s not doing charity.
“He’s a businessman and would sell his products to make gains,” he said
Currently, the sole importer of refined petroleum is facing a $ 6 billion backlog of payments to international traders which is affecting the supply of products across the country.
Marketers are gradually shifting attention to Dangote’s PMS product which could see the price go up further beyond N700 as analysts believe Dangote is going to enforce market-reflective price to recover the funds he borrowed to fund his refinery assets.
“Yes, he’s going to sell at market-reality price to recover cost and also because of logistics expenses he paid in importing his crude from outside the country,” Adigun added.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.