L-R Gbenga Komolafe, CEO of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Heineken Lokpobiri, Minister of petroleum Resources [oil], Aliko Dangote, Chairman and CEO of Dangote Group, Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Corporation Limited (NNPC), Farouk Ahmed, Authority Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) after a closed-door meeting to resolve the Dangote Refinery Impass
On Monday, Nigeria’s Minister for State, Petroleum Resources (Oil), Heineken Lokpobiri, held a critical meeting with top executives from Dangote Group, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Nigerian National Petroleum Company Limited (NNPC Ltd). This meeting aimed to address the ongoing issues at the Dangote Refinery.
The special adviser on media and communication to the minister, Nneamaka Okafor, revealed this in a statement on Monday. According to Ms. Okafor, stakeholders thanked the minister for his leadership and timely intervention in facilitating the dialogue.
The meeting aimed to find a sustainable solution to the current problems affecting the Dangote Refinery. All parties showed a commitment to working together and proactively solving the issues. The minister highlighted the importance of cooperation among stakeholders to ensure the success and optimal performance of Nigeria’s oil and gas sector. “This meeting marks a significant step towards resolving the challenges and underscores the minister’s dedication to fostering a conducive environment for Nigeria’s oil and gas sector,” the statement said.
Background
Last month, Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited (DIL), accused International Oil Companies (IOCs) in Nigeria of trying to frustrate the Dangote Oil Refinery and Petrochemicals. He claimed that IOCs were raising the premium price of local crude oil above the market price, forcing the refinery to import crude from distant countries like the United States, leading to higher costs.
Mr. Edwin also criticized the NMDPRA for granting licenses to marketers to import low-quality refined products into Nigeria. The NMDPRA responded, saying there is no dirty fuel being imported and that they ensure only quality petroleum products are supplied in Nigeria. They explained that ECOWAS heads of state endorsed a fuel roadmap in 2020 requiring certain products to have a minimum of 50 parts per million (ppm) of sulfur.
Mr. Edwin reiterated that IOCs in Nigeria were consistently blocking the refinery’s requests for locally produced crude. He explained that IOCs prefer to sell crude to international trading arms, which then sell it at a premium price. The NMDPRA Chief Executive, Farouk Ahmed, countered these claims, stating that the refinery was still in the pre-commissioning stage and not yet licensed. Mr. Ahmed also noted that Mr. Dangote requested the suspension of all petroleum product imports to direct all marketers to the refinery.
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House of Representatives’ Involvement
The House of Representatives has set up an ad hoc committee to investigate the alleged conspiracy by IOCs against the refinery. Minority Leader Kingsley Chinda moved the motion, stating that the alleged conspiracy undermines the refinery’s performance. “The alleged conspiracy against Dangote refinery relates to efforts by the IOCs to deliberately frustrate the refinery’s ability to buy local crude oil by manipulating and increasing the premium price above the market price,” Mr. Chinda said.
Mr. Chinda added that while IOCs aim to export raw materials to their home countries, creating wealth and employment for themselves, Nigeria remains dependent on imported petroleum products. The House urged the federal government, NUPRC, NMDPRA, and well-meaning Nigerians to support the Dangote Refinery.
Dangote’s Response and Refinery Operations
In response to the ongoing crisis, Mr. Dangote announced plans to halt investment in Nigeria’s steel industry to avoid accusations of monopolistic practices. The 650,000 barrels per day Dangote Petroleum Refinery began producing diesel and aviation fuel in January. The company received six million barrels of crude oil at its offshore facilities, with the first delivery on December 12, 2023, and the sixth on January 8, 2024. By April, the refinery started supplying petroleum products to the local market.
Mr. Dangote recently stated that petrol refined at the refinery would be available by July. Initially, NNPC Limited planned to acquire a 20 percent stake in the refinery. However, Mr. Dangote revealed that NNPC Ltd now owns only a 7.2 percent stake due to its failure to pay the balance of its share, which was due in June. “The agreement was actually 20 percent, which we had with NNPC, and they did not pay the balance of the money up till last year, and then we gave them another extension up till June (2024), and they said that they would remain where they have already paid which is 7.2 percent. So NNPC, the government, owns only 7.2 percent, not 20 percent,” Mr. Dangote explained.
NNPC Ltd confirmed this development, citing a periodic assessment of its investment portfolio. Mr. Dangote expressed his willingness to give up ownership of the refinery to NNPC Limited, as he told PREMIUM TIMES in an exclusive interview.