Mele Kyari, the Group Chief Executive of the Nigerian National Petroleum Corporation Limited (NNPCL) said something about a year ago. While answering questions on an Arise Television programme in June last year, Kyari dampened the spirits of his compatriots when he flatly declared that local refining of petroleum products was more or less, a waste of time, as according to him, it would not ensure lower prices.
“There is a notion that if the product is processed locally, prices will reduce. Let me make it clear that it is not going to change anything. If you produce locally, the refineries will also input the cost of production and other things and it will be sold at the current price.
“There will also be no subsidy when local production starts because there is no cash-to-back subsidy, this country no longer has the resources to continue with subsidy,” Kyari had stated.
The import of his statement appeared to have eluded many Nigerians back then but I remember raising the alarm at the apparent illogic on this page in a July 23, 2023 edition titled “Mele Kyari and the drumbeats of fifth columnists,” where I noted that the Kyari logic seems incoherent in the face of simple economics and that he was simply telling his countrymen there is no hope for their tomorrow because the dangers they see in the fuel price hike today could just be a tip of the iceberg.
I had noted then that the price of locally refined petroleum products and imported products couldn’t stand at par. Several cut-aways would give local refining a bit of edge, freight cost, being a major part of it. Indeed, if local refining of petroleum products confers no economic advantage, why do countries and businesses invest huge finance in setting up refineries? Every country would just have relied on imported petroleum products. It is easy to grab a sense from the more you look, the less you see comment of Mr. Kyari. And as if it was putting a lie to Kyari’s logic, Dangote Refinery immediately crashed the price of diesel and aviation fuel after it started production.
But in apparent moves to justify the claim that “local refining is a waste,” the NNPCL went ahead to lock in thousands of barrels of crude at the Port Harcourt Refinery, at a time the Dangote Refinery was scampering around for crude oil and had to place orders from the United States of America. Remember that the Port Harcourt Refinery, which we were told had been completed “mechanically” and was supposed to come alive in December 2023, is yet to give any sign of recovery seven months after.
In truth, not a few Nigerians are relying on the Dangote Refinery to help unknot the jigsaw over fuel importation and many had hoped that the NNPCL would provide the much-needed backing to the refinery once it starts production. As the nation’s motorists continue to thirst for the much-awaited Dangote petrol, the bubble burst two weeks ago when the local refinery, apparently tired of bottling the antics of the oil majors, the NNPCL and its subsidiaries, voiced out the frustrations its been encountering.
Devakumar Edwin, President, Oil and Gas at Dangote Industries Limited (DIL), who spoke of the unwholesome happenings told Nigerians that the International Oil Companies (IOCs) were plotting to cripple operations of the refinery. According to him, the IOCs were deliberately frustrating the refinery’s efforts to buy local crude by jerking up the high premium price above the market price and that the refinery was being made to pay $6 more in some instances, forcing the company to import crude from countries as far as the United States.
He blamed the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), especially for granting licenses to marketers to import “dirty refined products” into the country.
He said: “The Federal Government issued 25 licenses to build refineries and we are the only one that delivered on promise. In effect, we deserve every support from the Government. It is good to note that from the start of production, more than 3.5 billion litres, which represents 90 per cent of our production, have been exported. We are calling on the Federal Government and regulators to give us the necessary support to create jobs and prosperity for the nation.”
He added: “It appears that the objective of the IOCs is to ensure that Nigeria remains a country which exports Crude Oil and imports refined Petroleum Products. They (IOCs) are keen on exporting the raw materials to their home countries, creating employment and wealth for their countries, adding to their GDP, and dumping the expensive refined products into Nigeria – thus making us to be dependent on imported products.
“It is the same strategy the multinationals have been adopting in every commodity, making Nigeria and Sub-Saharan Africa to be facing unemployment and poverty, while they create wealth for themselves at our expense. This is exploitation – pure and simple. Unfortunately, the country is also playing into their hands by continuing to issue import licences, at the expense of our economy and at the cost of the health of the Nigerians who are exposed to carcinogenic products.”
The Dangote Company chief said more. But the little we can accommodate here has already given enough clue- IOCs and their Nigerian collaborators are the oil cabal President Bola Tinubu must crack, fast and quick. It is understood that the bulk of inflationary trends Nigerians have been coping with since May 29, 2023, has got to do with the removal of petroleum subsidy by the Tinubu administration. The country has also been suffering from an unstable foreign exchange market, which has resulted in the exit from the economy of many multinationals. That is also partly due to the pressure on the Naira to fund importation.
If President Tinubu wants to see real smiles on the lips of Nigerians other than the wry smiles of contractors who are only out to milk his administration, he must do something to the oil cabal, who are doing everything possible to keep Dangote’s petrol off the Nigerian streets in their avowed ploy to ensure Nigeria remains a refined fuel import-dependent country. Not doing that would do more harm to his legacy and pour more Nigerians into the poverty bracket.
The president must take a deep look into the operations of the NMDPRA. The response by that organisation to the complaints by Dangote Refinery was not just spurious but extremely unnationalistic. An official of the company, in denying the allegation of importing “dirty refined fuel” went ahead to justify the continuous issuance of import licenses to companies. I think the interest of Nigeria and the growth of Nigerian businesses should be uppermost in the minds of government-owned enterprises, like NNPCL, NMDPRA, and others.
This piece was first published in the LYNX EYE, by Sunday Tribune, June 30, 2024
