Oil & Gas
By Anthony Isibor
THE announcement that the $20 billion Dangote Refinery has commenced the production of petrol is exciting news to Nigerians and Africans.
With this development, the 28-year era of unproductive refineries in Nigeria is over.
Furthermore, the production is expected to offer the much-needed relief to millions of Nigerians by ending the long periods of petrol shortages, the long queues of vehicles at petrol stations, as well as reduce the overall cost of purchasing petroleum products in the country.
Announcing the commencement of petrol production during a press briefing on Tuesday, Aliko Dangote, President of the Dangote Group, said that the refinery would drive growth, development and prosperity by supplying energy to the people.
He also praised President Tinubu for the “Naira for crude, Naira for product” initiative, which he believes will stabilise the Naira by reducing the demand for dollars by 40%, adding that the refinery is designed to meet the demands of not only Nigerians, but also those in sub-Saharan Africa.
“As we have this refinery working, it will show the true consumption of Nigeria; we can track every loaded truck and ship,” he said.
However, in the midst of the landmark moment for Nigerians who have been grappling with the shortage of petrol and the high cost of the product, the Nigerian National Petroleum Company Limited, NNPCL, on Tuesday announced a further adjustment to the price from N617 to N897 per Litre.
The implication is that although the Dangote Refinery has been able to break a 28 year-jinx of unproductive refineries across the country, Nigerians are still in for more hardship as the NNPCL has been granted the right as sole distributors of the Dangote petrol, retaining it as a monopolists with obvious powers of price control among others.
The NNPCL in a short statement, informed the general public that the NNPCL Retail Management has approved upward review of petrol pump price from N617/litre to N897/liter effective 3rd September, 2024.
“Please ensure all your pumps and totems (price boards)/MIDs reflect the new PMS price of N897/liter.” the statement said.
With this new price hike Nigerians are expected to brace up for further increase in the costs of food items, transport fares and other services.
According to a News Agency of Nigeria, NAN report, Nigerians have began to feel the heat of the increase as the NNPC retail stations had immediately adjusted their pumps and totems (price boards), reflecting the new PMS price of N897 as against N617 per lite even as independent marketers also adjusted their pumps to sell between N930 and N1,200.
It noted that many motorists in the Federal Capital Territory, FCT on Tuesday expressed frustration over the increase even as many commercial vehicles were off the roads as operators queued at the few filling stations selling the product.
Some motorists, who spoke expressed sadness about the situation, while calling for the Federal Government’s intervention on the persistent fuel scarcity and hardship on citizens.
Alhaji Abdulaziz Isah, a businessman said the removal of the fuel subsidy with no proper plans in place had affected the oil and gas sector as well as the nation’s economy.
“The dollars keep going high and it makes it difficult for the importers and marketers to buy petrol, this is because they need to sell as they buy to make their profit.
“If the government is not ready to make a lasting policy they should bring back the subsidy as a lot of citizens are suffering.” Isah said.
A civil servant, Mr Aloze Ojo, said he had been in the filling station since 7 a.m, and he was yet to get fuel.
“We know it is not the government’s making but it should work on the roadmap to avoid any further problem.
“The hardship is too much, at times, I cannot go to work because there is no money for transportation and feeding is a bigger problem.”
A taxi driver, Olusegun Ade said that things were so complicated presently, as they were battling with high cost of petrol and scarcity.
“I run at a loss now, this is because I buy at a high cost and if I increase the transportation, some passengers nay not be able to afford it.
“My family depends on my daily returns and it has not been easy meeting up and with the latest increase I do not know what to do.
“I am begging our president to do something fast on the suffering of Nigerians as it is not easy for a lot of us please,” Ade said.
Mrs Rita Uka, a retired civil servant also urged the government to hasten its Compressed Natural Gas (CNG) project across the country to boost utilisation of CNG vehicles to crash transport fares.
She said that over dependence on PMS was literally making it a scarce product, adding that when CNG becomes common, with its affordability and infrastructure nationwide, PMS would not be scarce anymore.
A Bolt and Uber driver, Mrs Alice Uzo said that the harsh economic situation had increased occasioned by the lack of fuel as well as its high cost.
She said that there was no more profit in the business as she had been driving at a loss just to sustain her means of livelihood.
“I think I will just go home and sleep because this will be very hard, where are we going to? The president needs to do something urgently.”
Although some stakeholders in the oil and gas industry had on Tuesday said that the increase in the petrol pump price was unavoidable and would help alleviate the subsidy burden on both the Federal Government and the NNPCL many Nigerians and groups have condemned the increase and called for a reversal.
Henry Adigun, an oil and gas consultant, said that while the price increase was a step towards addressing the subsidy issue, it did not resolve the need for total deregulation of the downstream petroleum sector.
“Unless market prices align with international product prices, NNPCL will remain the sole importer,” Adigun explained.
He welcomed the commencement of petrol production by Dangote Refinery, but noted that Dangote’s supply would hinge on favourable market conditions.
Adigun also emphasised the need for collaboration with marketers, as direct loading from the gantry might not be feasible for many distributors.
Ukadike Chinedu, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), said that NNPCL had not officially informed marketers about the price increase.
Chinedu said that depot owners and marketers were awaiting further directives from NNPCL.
He expressed optimism that Dangote Refinery’s entry into the market would enhance product availability and address scarcity issues.
“I anticipate that Dangote will increase the supply of petrol and automatic gasoline oil in the Nigerian market.
“Marketers should be allowed to purchase products from Dangote and compete with NNPCL,” Chinedu added.
He said that availability was crucial, but noted that competition would follow.
Dr Ayodele Oni, Partner at Bloomfield Law Practice, described the price increase as unfortunate but reflective of market realities.
Oni questioned whether the new price covers all costs and provides a sufficient margin.
“If the new price is market-driven and covers all costs, it will be effective. Otherwise, we may face the same issues,” he said.
Oni noted that the Petroleum Industry Act (PIA) encourages market pricing rather than monopoly.
He suggested that while availability might improve, prices were unlikely to decrease significantly.
Already, the Nigeria Labour Congress, NLC has called for the immediate reversal of the new price increase in pump price of petrol across the country.
Joe Ajaero, President of the union who made the call on Tuesday while reacting to the development, said the Congress felt a deep sense of betrayal by the increase in the pump price of petrol.
He recalled that, one of the reasons for accepting N70,000 as national minimum wage was the understanding that the pump price of petrol would not be increased, even as they knew that N70,000 was not sufficient.
“We opted for the latter because we could not bring ourselves to accept further punishment on Nigerians.
“But here we are, barely one month after and with government yet to commence payment of the new national minimum wage, confronted by a reality we cannot explain. It is both traumatic and nightmarish.
“Yet, when we told government that it’s approach to resolving the fuel subsidy contradictions was patently faulty and would not last, it’s front row cheer leaders sneered at us, saying we did not understand basic economics .
“But if truth be told, this act of betrayal is consistent,’” he said.
Ajaero also recalled the assurances given to the congress by the leadership of the National Assembly on the reversal of 250 per cent electricity tariff hike.
He said, instead of the promised reversal, the rate has since been jerked up further, putting more Nigerians and businesses in jeopardy.
In addition to the reversal of the increased price of petrol pump price and electricity tariff, the NLC called for the release of all those incarcerated or being prosecuted for participating or purportedly participated in the recent #Endbadgovernance protest.
Ajaero said the Congress also demanded a halt in the indiscriminate arrest and detention of citizens on trumped up charges.
“The Congress demand a stop to the hijack of the duties of the Ministry of Labour and Employment.
“We also demand end to policies that engender hunger and insecurity as well as a halt to government’s culture of terror, fear and lying,” he said.
Ajaero said in the coming days, the appropriate organs of the congress would be meeting to take appropriate decisions which would be made public.
Similarly, the Nigeria Employers Consultative Association NECA says the new pump price of petrol is worrisome and unfair.
Mr Adewale-Smatt Oyerinde, the Director-General of NECA, said this in a statement while reacting to the new hike in pump price of PMS on Tuesday in Abuja.
“We had expected that the government will leverage on the momentum created by the completion of the Dangote refinery and the planned commencement of operation of the Port-Harcourt refinery.
“This is in order to clear the obvious self-inflicted pain on Nigerians and progressively reduce the pump price of petrol. This seems not to be the case.
“This new pump price could be seen as making Nigerians to pay for the crass inefficiency in the NNPCL,”he said.
He said that rather than address the fundamentals that have made Nigeria a net importer of petrol, even when we have four refineries, government have continued to inflict pain on Nigerians.
According to him, the government is, inadvertently, contributing to the increase in cost of doing business.
“We advise that government should have a rethink and do all that is necessary to address the continuous impoverishment of Nigerians and incapacitation of organised businesses,”he added
Also, Sand Mba-Kalu, an Economic Expert said that the fuel price hike by NNPC Ltd.
from N617 per litre to N897 litre was beyond a simple fuel price adjustment as it will push more Nigerians into poverty.
He said that it would have a far-reaching impact on Nigeria’s private sector, trade and the already suffering Nigerian masses.
Mba-Kalu, the Executive Director, Africa international Trade and Commerce Research said this in an interview with NAN on Tuesday in Abuja.
He noted that without government interventions, the economic and social repercussions of this price hike could be severe and long-lasting, pushing more people into poverty.
“What we will witness is the immediate high cost of transport, which will lead to higher costs of food and inflation.
“In the long term, it could pose challenges for small and medium-sized enterprises (SMEs) and the agricultural sector,” the expert said.
He urged the Federal Government to acknowledge these implications and consider measures to reduce the impact, such as targeted incentives for energy efficiency, stopping wasteful spending, and reducing cost of governance.
“Without such interventions, the economic and social repercussions of this price hike could be severe and long-lasting, pushing more people into poverty,” he warned.
On his own part, Peter Obi through his X handle n Tuesday demanded for transparency from NNPCL noting that incompetence was the bane of the fuel crisis.
The Presidential Candidate of the Labour Party in the 2023 general elections challenged the federal government to come clean and tell Nigerians all that is going on in the NNPCL owned by the people.
Obi said that the continuous running of critical government agencies in secrecy is unacceptable.
Writing on his X handle on Tuesday the former Anambra State Governor said “Nigerians must stop at nothing to continue their demand for transparency in the operations of government especially critical agencies like the state-owned NNPCL whose activities appear to be shrouded in secrecy.
“The conflicting reports on subsidies have left Nigerians in the dark, unsure of what is happening in such prime tax payer’s company.
“It’s utterly curious that the Nigerian National Petroleum Company Limited (NNPCL) which declared a N3 trillion profit in 2023, is coming up with a bizarre claim of “financial constraints” in supplying fuel.
“This is an insult to the intelligence of the Nigerian people and a slap in the face of our suffering citizens.
“The fuel scarcity crisis, characterized by endless queues and untold hardship, is a direct result of the government’s ineptitude. The $20 billion Dangote Refinery’s struggles to secure crude oil supply and NNPCL’s search for outside operators for the refineries are further proof of this administration’s gross incompetence.
“We demand immediate transparency into NNPCL’s operations, financial dealings, and plans for the future. The Petroleum Industry Act mandates an open and transparent NNPCL, and we should not stand idly by while this government violates our laws and mocks our democracy.
“We demand that this administration come clean on these issues and take responsibility for the mess it has created. We should not rest until we uncover the truth and hold those responsible accountable. The Nigerian people deserve better.”
Recall that the NNPC had disclosed on Sunday it was under severe financial strain, owing $6 billion to oil traders for supplies since January and attributed this to the continued shortage of the product in the country.
It said that the debt burden had impacted its ability to maintain a steady supply of fuel in the local market, resulting in persistent fuel queues since July and a sharp 45% increase in fuel prices from the official rate of N617 ($0.3942), following the removal of subsidy on May 29, 2023 by President Bola Tinubu.
With this new Pump Price of petrol on one hand, the NNPCL, which admitted that it has not been able to meet local fuel demands, will, however, remain the sole buyer of petrol processed by Dangote Refinery.
This is coming a few days after the government, in a statement, signed by Nnemaka Okafor, Special Adiver to the Minister of State for Petroleum, had refuted a report suggesting that the Ministry had ordered NNPCL to sell fuel at N1000, above the approved pump price.
According to Nnemaka, ‘there was never a time FG interfered with petroleum pricing with NNPCL, let alone give directives for price increment.
She said, “The Federal Government is compelled to address the outright falsehoods currently being circulated on social media, which claims that the Honourable Minister for Petroleum Resources (Oil), Senator Heineken Lokpobiri, has directed the Nigerian National Petroleum Company Limited (NNPCL) to inflate petroleum prices above the approved pump price.”
“We categorically condemn these claims as baseless, malicious and a deliberate attempt to incite public discontent.”
“We challenge anyone in possession of any evidence-be it written documents, audio, or video recordings-that supports these fabrications to make it public.”
“Such a claim is entirely devoid of truth and should be recognized as an intentional effort to mislead the public.”
“It must be stressed that NNPCL operates as an independent entity under the Companies and Allied Matters Act (CAMA), with a fully empowered Board of Directors. “
“The Ministry of Petroleum Resources does not, and will not, interfere in the internal decisions of NNPCL, including pricing matters. Any suggestion otherwise is incorrect and reveals a profound misunderstanding of the deregulated nature of Nigeria’s petroleum sector,” the statement said.
A.I
Sept. 4, 2024
Tags: Anthony Isibor Nigerian National Petroleum Company Limited Nnemaka Okafor NNPCL Senator Heineken Lokpobiri
