On Petroleum Industry Bill proposal

RECENTLY,  a  presentation was made to the National Assembly’s Joint Committee on the Petroleum Industry Bill (PIB) by the Dangote Group, namely that oil import licence be given only to companies with active refinery licences. Chief Strategy Officer of the Group, Aliyu Suleiman, was quoted to have highlighted several recommendations by the company to the committee, among which was this ground-shaking demand. “Nigeria is exceptional in being a major oil producer with near zero capacity. Though the Dangote Refinery will help address this, there could be periods when petroleum products may need to be imported, such as when the refinery is undergoing turnaround maintenance or if demand grows to exceed capacity. To support this, licence to import any product shortfalls should be assigned only to companies with active refining licences. Import volume to be allocated between participants based on their respective production in the preceding quarter. Such import will be done under the DSDP scheme,” Suleiman said.  From sugar, cement, food items production and to its recent foray into oil production, the Group controls the major artery of entrepreneurship and business as a whole in Nigeria. With this as background, it would be senseless to ignore the contributions it makes to the theoretical underpinning of any venture in Nigeria.

Today, the in-road into the oil sector with Dangote refinery is a phenomenal project that the Nigerian government and the people look forward to with baited breath. A 650,000 barrels per day (bpd) integrated refinery and petrochemical project is currently under construction at its location in the Lekki Free Zone near Lagos. By projection, the refinery, upon completion, is primed to be Africa’s biggest oil refinery and indeed, the biggest single-train facility in the world. Its initial completion schedule was 2020, until time put spanners in its works and projected completion time currently indecipherable. There is yet to be an official communication of reasons behind the inability to meet this scheduled date and communication of the sure date that the project would begin to refine petroleum products. The oil refinery, brainchild of the famous richest man in Africa, Aliko Dangote, is an estimated investment that is worth $12bn and a projected jobs generation of 9,500 direct and 25,000 indirect employments. Part of the oil productions that the Dangote refinery will bring to table is the production of a variety of light and medium grades of crude. This will subsequently lead to the production of Euro-V quality clean fuels which also included gasoline, diesel, jet fuel and polypropylene.

In the roulette of epileptic fuel supply, the considered inappropriate importation of fuel products shipped abroad as crude, the Dangote Oil Refinery offers a binge of excitement to the Nigerian government and Nigerians in general. Upon completion, it was primed to hold the hope of rescuing Nigeria from the travails of refining petroleum products abroad and shipping same back to the country. The Nigerian government had looked forward to the completion of the oil refinery as a way of ending this roulette of importation of petroleum products and shoring up its foreign exchange earnings. In December 2019, after a four-hour tour of the refinery, the CBN Governor, Godwin Emefiele, said that the Federal Government would soon start sourcing foreign exchange (forex) from the Dangote Group, after the completion of its refinery, petrochemicals and fertilizer projects are completed.

In the euphoria of its huge financial leap expectations to Nigeria from the oil refinery business, the project was given very generous concessions by government, one of which is waivers and free access to foreign exchange from the Central Bank of Nigeria (CBN). Though this concession agreement violates the free enterprise rule of the Free Trade Zone policy of the Lekki Free Trade Zone where the refinery is expected to operate, government and the FTZ looked the other way. The strict rule that was manifestly pursued in respect of all ventures operating at the zone is that every enterprise therein must raise forex by itself and such forex was free from excise duties, as well as nil restriction to the repatriation of the investor’s money if and when the investor deems it necessary.  A few months ago, indications emerged from the Department of Petroleum Resources (DPR) that the Group might have made an application to the DPR to begin retail trading of petroleum products. In the oil and gas sector, retail trade involves the marketing and distribution and sale of petroleum products purchased wholesale or directly from retail outlets. If this application was granted, the Group would then have a dual involvement in this sector, or abandon one for the other as the two are not mutually inclusive.

If the demand to have oil import licences given to only companies with active refinery licences is granted, there would be a cloning of a deadly monopoly.  With its backward integration policy application to the downstream petroleum sector, watchers of the industry wonder what then happened to Nigerian investors who have voted billions of naira into the same venture. The alibi of a periodic Turn Around Maintenance (TAM) of the refinery as reason why it should also superintend over fuel importation lacks cohesion and logic. This is because, TAM is a periodic process and when that happens, modular refineries in Nigeria could latch on to this short lacuna. In specific terms, the submission made to the National Assembly’s Joint Committee on the Petroleum Industry Bill, from all intent and purposes, is dangerous to the entrepreneurial business in Nigeria. It may be read as an attempt by a single endeavour to translate itself into the biblical end time 666 number which gives access to humanity to live and find subsistence. Without 666 number, no man can find survival. If only this once, government must rise in defence of its people and stop a bludgeoning entrepreneurial octopod from swallowing lesser crabs and fishes in the ocean of the petroleum business world in the country.


  • Ejokparoghene, an Abuja based petroleum industry analyst, writes in via fejokparoghene@gmail.com


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