The House of Representatives, on Wednesday, showered encomium on the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, on the repositioning of the state-owned oil company.
Chairman, House Committee on Finance, Hon James Faleke, who presided over the interactive session on the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), applauded the NNPC helmsman on the investment in Dangote Refinery and sales of domestic crude oil as well as rehabilitation of the four refineries.
While noting that the corporation’s equity shareholding interest in Dangote Refinery was executed at the instance of NNPC with a view to guarantee national energy security for the country, Mallam Kyari averred that the equity interest was secured after due consideration of the national interest and best possible options.
He also expressed optimism that Nigeria will stop the importation of petroleum products when the Petroleum Industry Act, 2021 becomes fully operational.
“The vision to take equity in the Dangote Refinery was a calculated and a conscious decision. First, there is no resource dependent on a country like ours and anywhere with a national company will have a venture of this size and magnitude, with its very clear security implications that are situated in a Free Trade Zone literally this Refinery is not in this country.
“Today we import 100 per cent of our petroleum products in this country; you now have a venture that will produce close to 50 million litres of petroleum products in this country, where energy security is an issue in every country including the United States of America to my personal knowledge, that the USA they keep stock of petroleum products on the ground that government owns it, and that government pays for it and keeps it. Today, we don’t have any strategic storage arrangement, so no country will allow any venture of this nature to exist without having a seat on the board of companies like that.
“Secondly this company is situated in the Free Trade Zone, the meaning of this is that there are several incentives given to this business. If you look at our total investment yet, we haven’t closed yet; of about $2.7 billion not $5 billion, our total stake of 20 per cent is about $2.7 billion. If you are to put 50 per cent of that capacity, it will be around 130 barrels per day refinery, it’s simply impossible to build a simple refinery of that capacity with that amount of money.
“And this refinery is not just a refinery, it’s a refinery with the attachment of a petrochemical company. So somebody has done, let me use Nigerian parlance, done all the Jackie work for us and we are taking interest in it. and I can confirm Mr Chairman, that taking stake is at the instance of NNPC, I believe very strongly up to this time that Mr Dangote does not want us to take equity in this plant. It was a very informed policy decision that first will guarantee energy security because we will have the right to 20 per cent production from this facility.
“Secondly, Mr Chairman, he has the option of buying crude from anywhere, so you can’t force him to buy crude; we structured our equity participation on the fact that this refinery must buy at least 300,000 barrels of crude oil per day of our production into this refinery. This guarantees your market. Today every country is struggling to find a market for their crude oil, this refinery doesn’t owe us any responsibility if we don’t have such an arrangement, that is why we tied our participation to the fact that this refinery must buy crude from us,” he noted.
In his presentation, Kyari who provided a base oil price scenario in the medium term as follows: $57 per barrel for 2022, $61 per barrel for 2023 and $62 per barrel for 2023, explained that the assumptions were arrived at after a careful appraisal of the three-year historical dated Brent Oil Price average of $59.07 per barrel premised on Platts Spot Prices.
“Price growth is to be moderated by the lingering concerns over COVID-19, increased energy efficiency, switching due to increased utilisation of gas and alternatives for electricity generation. These are reflected in the Medium Term Revenue Framework,” Kyari informed.
On the perennial issue of smuggling of petroleum products, Mallam Kyari implored the National Assembly to come to the aid of the Corporation in battling the menace, noting that the Corporation based on the directive of Mr President had mobilized some security agencies including Nigeria Customs Service, Economic and Financial Crimes Commission (EFCC), Nigeria Police, Nigeria Security and Civil Defence Corps (NSCDC) and others to find workable solutions to the menace.
While responding to question on the actual daily crude oil production, Mallam Kyari explained that between 60 and 70 per cent of the crude oil production are lost to vandals and sabotage in the process of transportation to the flow-station, adding that most of the agencies involved in the transportation and monitoring of petroleum products are “compromised.”
On the propriety of establishing NNPC Retail stations in neighbouring countries to curb the challenge of illegal haulage of petroleum products across the border, Mallam Kyari said though the NNPC once considered the option, it had to jettison the idea when it became imperative that the measure would be counter-productive.
He explained that people who are smuggling are not looking for officially priced petroleum products. He further noted that going ahead to establish NNPC Retail stations would not yield the desired result since the people who take products across the border are not interested in selling at the official prevailing prices at approved stations but are interested in under the counter deals.
While expressing satisfaction with the giant stride made by the NNPC management, Hon. Faleke said: “You have made our day. The committee is better informed based on explanations provided by the GMD.”
YOU SHOULD NOT MISS THESE HEADLINES FROM NIGERIAN TRIBUNE
Marburg Virus: What You Need To Know About Disease Recently Detected In West Africa
On Monday, August 9, 2021, the World Health Organisation (WHO) confirmed the first case of Marburg virus in West Africa in Guinea. This development has sent shivers down the spines of West Africans who are still grappling with the effects of the coronavirus pandemic. But before this dreaded disease is greeted by rumours and misinformation, here is what you have to know about the virus.Reps applaud NNPC’ stride on oil production, revenue generation.Reps applaud NNPC’ stride on oil production, revenue generation
Reps applaud NNPC’ stride on oil production, revenue generation
and then