In recent weeks, a drama with all the trappings of magic has been playing out between the Nigerian National Petroleum Corporation Limited (NNPCL) and Dangote Refineries. Since the $20 billion refinery came into operation in January 2024 and into production of petrol, popularly called Premium Motor Spirit (PMS) in Nigeria, in mid-September, the nation has been treated to one form of black market injunction or the other. Black markets hardly yield positive ends, and neither do black market injunctions. Remember Justice Bassey Ikpeme’s midnight ruling that was used by the General Ibrahim Babangida-led military gang to throw the June 12, 1993 election into a quandary. That’s the kind of ruling Nigerians have been receiving from the NNPC all this while.
Surprisingly, the private entity, Dangote refineries, has been acquiescing with an eerie silence that belies the words deregulation and market forces, which the NNPCL has frequently relied on, to horsewhip Nigerians with higher petrol prices.
First, the NNPCL announced it would be the sole off-taker of Dangote’s petrol, while other marketers were free to purchase other products from the refinery. Again, it announced that independent marketers were free to source petrol from the Dangote refinery but first jerked up the prices at the pump, apparently to tie the hands of Dangote to sell at lower prices even before litre of fuel could filter into the tanks of the independents. In all these, Dangote has only said that the price of petrol would be determined by a committee at the instance of the Federal Executive Council (FEC).
When the NNPCL announced its latest price increase on petrol, the Independent Petrol Marketers Association of Nigeria (IPMAN) was out to pillory the decision. The officials fumed and accused the NNPCL of playing the Shylock and that the prices it announced were on the high side. Interestingly, Dangote Refinery did not say a word. This development, coming from Dangote, is not only puzzling but befuddling. In the first instance, it is curious that a body sanctioned by the FEC is the one determining the cost per litre of petrol for Dangote. This is a product whose international price is never hidden. In Nigeria, the question has always been about the domestic cost of petroleum products. Should Nigerians pay the international rate for petroleum products, especially when social insecurity measures are near zero in the polity? Or should there be a form of moratorium that would shield Nigerians from the vagaries of international oil prices? And I think that was the gap the decision to sell crude in Naira to Dangote and other refineries was meant to fill. Many Nigerians have reckoned that if crude is sold to Dangote in Naira, that should reduce the burden on the nation’s currency and bring some attendant benefits. There is also the belief that if Dangote petrol is circulated across the country, the question of subsidy that has swept an unpalatable volume of the people’s wealth into the drains should become a thing of the past. But the more you look, the less you see has become the sing-song as far as the NNPCL/Dangote romance has been so far. Neither the NNPC nor Dangote could come up with the figures Nigerians could work with.
Even though the refinery once tackled the NNPC for releasing figures that it regarded far above its selling price, the refinery has never come up with its own unit cost. This tells us there is a black market stuff or is it Gwo Gwo Gwo Ngwo, around this business of NNPCL/Dangote petrol business. That has incidentally provided a solid foundation for the series of black market price injunctions the NNPC has imposed on the citizens in recent times. As I was ruminating over this development, I came across a post by a compatriot who reproduced the reply given by the winner of the June 12, 1993 election, the late Chief MKO Abiola, when he was asked whether he would increase fuel prices or not. In the post circulated on WhatsApp groups, the compatriot quoted Chief Abiola as saying: “You know I am a chartered accountant. If anybody confronts me with the idea that fuel price should be increased, the first question I will ask is, how much does it cost to produce a litre of petrol, minding the other derivatives from crude?”
As experts would say, such other yields derivable from Nigeria’s crude Bonny Light include Gasoline (PMS): 12.5 gallons or 47.3 liters; Diesel: 9.5 gallons or 36.0 liters; Jet Fuel (Kerosene): 3.5 gallons or 13.2 liters; Fuel Oil: 6.0 gallons or 22.7 liters; petrochemicals: 2.5 gallons or 9.5 liters; while other products such as asphalt, lubricants amount to 1.5 gallons or 5.7 liters. The total yield from a typical barrel of Brent Crude is 42 gallons or 159 liters. With each of the products going for different prices in the market, it shouldn’t be difficult to account for the unit cost of either petrol, diesel, or any of the derivatives.
But it appears the NNPCL and Dangote have been using wool to cover our eyes all this while. First, the Federal Government, in the name of deregulation jerked up the price of diesel and at a point, it was N1,900 per litre. With the coming of Dangote refinery in January, however, the price scaled down to N1,100 at the moment. But Petrol, which was N197 per litre in May 2023 has climbed to between N1,100 and N1,200 in some cases. Now diesel has become readily available and cheaper. What magic happened to diesel that is difficult to apply to petrol, one may ask? Something is fishy as far as the pricing regime of petrol is concerned. The fact that Dangote Refinery has been silent on the most important question of unit price arms the suspicion the more.
It is quite sad that thus far, it is the governments led by the acclaimed progressive politicians in Nigeria that have been unduly cocky on petrol pricing. Nigerians would recall that when the despotic regime of the late General Sani Abacha increased fuel prices in 1994, it set up the Petroleum Trust Fund (PTF) managed by then-General Muhammadu Buhari. The PTF was to utilise the savings from the removal of petroleum subsidies to provide infrastructure and intervene in other sectors including health. A similar policy was equally midwifed by the administration of President Goodluck Jonathan when he partially removed fuel subsidies in 2012. He set up the Subsidy Reinvestment and Empowerment Programme (SURE-P), which adopted an allocation formula that massively favoured the states. The SURE-P, like PTF before it, made good the promise of an interventionist agency that delivered on several fronts as it helped to complete many moribund infrastructure projects.
But while President Buhari increased fuel prices seven times in eight years, he refused to create an avenue by which Nigerians could certify the effect of the subsidies he removed. The Tinubu government has followed the same path since May 29, 2023. In effect, the Federal Government and its agent, the NNPC as well as the business ally, Dangote have been hoodwinking us with black market sales and a cocktail of abracadabra.
What we expect as citizens is however a measure of transparency. Even an infant would find it difficult to believe that a Dangote, whose salt, sugar, cement, and other products can be seen in virtually all nooks and crannies of Nigeria would not know the unit price of the product that comes out of his mill, or that he needs a middleman to distribute products across the country he knows as the palm of his hand. President Bola Tinubu needs to know that the cast is dragging this scene, the director needs to step in.
(Published in the Sunday Tribune, October 20, 2024)
