Indications show that the leadership of Dangote refinery and the Nigerian National Petroluem Company Limited (NNPCL) have made significant progress in their 3 week negotiations on in-country fuel supply with the national oil company requesting for a permanent office at the facility.
It was also learnt that the President of Dangote Group, Alinko Dangote has now accepted to sell the refined petrol from his 650,000 barrels per day refinery in Naira, Nigeria’s local currency.
This was disclosed on Thursday by the Vice President, Oil and Gas, Dangote Industries Limited, Devakumar Edwin during an X Space event.
Edwin discussed the progress made by the refinery in the production of Petrol, stressing that NNPCL had informed the management of it intention to station a team of 6 to 10 people permanently at the $20 billion refinery.
The purpose of the team is to oversee the production and buying back the products in Naira since the NNPC would be supplying its crude. The request according to him aligns with NNPC’s aim to closely monitor the entire process, ensuring consistent crude supply and efficient processing to ensure steady flow of PMS for the country.
“NNPC has informed us that they intend to station a team of six to 10 people permanently at our refinery. They’ve asked us to provide office space for them since they will be supplying the crude, overseeing the production, and buying back the products in Naira.
“This request aligns with the NNPC’s aim to closely monitor the entire process, ensuring that crude is supplied and processed efficiently while securing a steady flow of PMS for the country,” Edwin stated.
Edwin also noted that the discussions with the NNPC revolved around a new model for crude supply where the refinery will buy crude from the government in Naira and sell PMS in the same currency.
“We are still in talks with the government about receiving crude in Naira. The discussions are ongoing, and nothing has been finalised yet. Some unresolved issues include the pricing of crude, the pricing mechanism, and determining the appropriate exchange rate for the Naira,” he said.
But Edwin explained that Aliko Dangote had agreed to the federal government’s proposal to sell products from the NNPC to the government in Naira, despite the likelihood of financial losses.
Edwin also commented that Dangote accepted the intervention because the country desperately needs foreign exchange even if the refinery would run at a loss he also expressed frustration at the alleged boycott of Dangote Refinery’s products by local marketers who despite availability of affordable petroleum products prefer to continue importing from abroad.
He said: “The whole purpose of doing this refinery in Nigeria was to utilise our local crude instead of exporting raw materials and importing finished products. We should be able to refine and use the finished products within Nigeria and produce more to export the surplus.”
According to him, around 97 percent of the refinery’s production, including diesel and jet fuel, was being exported due to a boycott by local traders who refuse to buy at the refinery’s lower prices, but rather import for reasons he didn’t state.
A shocking disclosure by Edwin revealed that oil marketers wrote to President Bola Tinubu, complaining about the refinery’s pricing strategies, claiming that they were disturbinh the market by dropping their prices.
According to him, the refinery can produce up to 54 million litres of refined petroleum products per day, depending on crude oil supply, but as crude oil supplies has been inconsistent, it has forced the refinery to depend on crude from countries like US and Brazil.
He also mentioned that just 44 per cent production of the refinery was enough to meet 100% of Nigeria’s petroleum needs, while the rest could be exported. It was strange to him that the diesel and jet fuel being produced was being exported because the local marketers refuse to buy from them.
With investment of about $3 billion in fertiliser and $20 billion in the refinery, he explained that unless the business makes some money, it will not be able to invest in upstream.
He explained that as an employee of Aliko Dangote 33 years, all the money made by Africa’s richest man makes goes into further investment to ensure the employment of Nigeria’s teeming population.
