Nigeria’s greasy oil game
Exactly what type of greasy business is going on in Nigeria’s oil industry at the moment? The warped tales that Nigerians and indeed, the world, are being regaled on daily basis, by the government and the Nigerian National Petroleum Company Limited (NNPC Limited), concerning the handling of petroleum resources, speak of everything that is wrong with economic management and planning in the present dispensation.
Even for the pillaging and impropriety that have marked activities in Nigeria’s petroleum sector through the years and across various regimes, there is cause to worry at what is presently going on. Brazenness is perhaps, the word. The apprehension, by both industry watchers and stakeholders, at the moment, is that Nigeria’s oil industry may not survive what appears to be a new regime of shambolic administration that sways between superintendency and wilful business obstructionism
The unfortunate reality about the country’s petroleum sector at the moment, is that the government and the NNPC have sufficiently muddled issues, intentionally, to the point that virtually nobody, not even experts in the industry, seem to have a firm grasp what exactly is going on there. The sanity and better control that the Petroleum Industry Act (PIA) aimed to instil on the petroleum industry are yet to materialize
In 2021, when the PIA came into existence, one of the celebrated immediate fruits of the supposed new order, was the transformation of the 42-year-old Nigerian National Petroleum Corporation (NNPC), into Nigerian National Petroleum Company Limited (NNPCL), a new entity, supposedly. The failure or refusal, by the government, the sole owner and controller of the two entities, to effect even a distinct nomenclatorial change between the old and new companies, fed the cynicism of those who saw and foresaw no difference between the old and the purported new entity. To further confirm that indeed, nothing really changed, Mele Kolo Kyari, the chief executive officer of NNPC was retained in the same position for NNPCL. Kyari has proved himself a master. The question is, of what?
To be fair to him, Kyari has never changed one bit. He has remained in NNPCL, as he was in NNPC; something between a smooth salesman, a politician and to some extent, a confidence man. He rarely delivers on what he promises, but who remembers that?
The completion by Aliko Dangote of his highly anticipated refinery and its subsequent commencement of production of Premium Motor Spirit (PMS) on September 3 2024, have suddenly presented unforeseen problems for NNPCL, Mele Kyari and the government. There certainly, would not have been an issue, it can be wagered, if Bola Tinubu did not take Aso Villa. Tinubu’s presidency, has introduced all manner of complexities in the sector, which Kyari and NNPCL could not have planned for. The price is for Nigerians to pay,anyway.
In the new chaos that has overtaken Nigeria’s petroleum industry, more so with the commencement of PMS production by Dangote, NNPCL and Kyari are looking increasingly ugly. The State oil company’s discordant tunes about whether it makes sense to buy locally produced petrol or to continue to import, likely from Malta, Nigeria’s 13th oil producing state, is being watched with consternation by Nigerians.
There are other critical questions begging for answer. One, is NNPCL a commercial entity engaged in business in the oil industry as a competitor with other commercial players, including Dangote Refinery, or is it a supervisory agency in the sector? Is the company licenced to operate as an agent of otherwise competing entities, both producers and distributors? Is Nigeria as represented by NNPCL, an investor in Dangote Refinery? If it is, how much did Nigeria invest in the Dangote project? Various sums have been bandied in the past, from $7 billion to $20 billion. Dangote himself seems to have confirmed $7 billion, when he said publicly, that the NNPCL could not meet the timeline to redeem the equity reserve to up its stake to $20 billion.
So then, what is the relationship between NNPCL (Nigeria) and Dangote Refinery? If Nigeria invested in Dangote Refinery, as Nigeria has invested variously in Dangote over the years, what was the agreement or at least, understanding, in making the investment? Are Nigerians not supposed to derive benefit from the Dangote Refinery?
One of the bases on which the government’s periodic hike in the price of petrol is anchored, is what they term landing cost, a phrase that provides lush ground for importers of petrol to hold Nigerians to ransom. Now, if Dangote Refinery is buying its crude, wholly or partially, in Nigeria and in Naira, how much of landing cost is still there for distributors to contend with?
When the Petroleum Industry Act heralded the coming of the NNPCL in 2021, a brief summary of the focus of the new company, as captured in its website, is that the said new entity is “a company free to operate in different sectors of the global energy industry and pursue other commercially viable ventures that will guarantee value to all its stakeholders” .How much of this profile fits NNPCL now?
If NNPC does not have a single functioning refinery, but it proceeded to lease or sell all its retail petrol selling outlets in the country, what exactly is the primary preoccupation of the company at the moment? Maybe it is now focused on producing crude? But then, a substantial portion of the crude produced in the country cannot even be accounted for, oil theft industry having become a thriving sub-sector of the Nigerian oil industry? So, what exactly is the area of core competence and focus of NNPCL? Is the company now an elite rent seeker, in a society littered with the such?
The ongoing altercation between the NNPCL and Dangote Company leaves a lot of issues unresolved. Last week Mr. Edwin Devakumar, vice president, Oil and Gas, at Dangote Industries Limited, speaking in a tone that betrayed the frustration of his group, informed that “There has been a kind of blockade from lifting our products within the country. The traders have been trying to blockade, and so now, we have been exporting our petroleum products We are ready to pump in PMS as much as possible to the country”
Talking directly of the NNPCL, the Dangote executive made it clear that “If the traders, or NNPC are not buying the product, obviously we will end up exporting the PMS, as we are doing with aviation jet and diesel”. He added, for emphasis, that Nigeria is still exporting crude and importing refined petroleum products, while Dangote Refinery “has not loaded up to 5 % of its stored capacity, due to low local patronage”. So, what is going on? Personal interest? But Kyari was there from the beginning. He was a key enthusiastic supporter of the Dangote project at its onset. Is it all about survival?
Last week, NNPCL released a statement, explaining that it will not buy from Dangote Refinery, unless its product is cheaper than what obtains in the international market. It is easy, to read from that statement, that the NNPCL, for whatever reasons, still has its interest outside the shores of Nigeria. But then, why should Dangote petrol, produced at home, not be cheaper than what obtains in the said international market? With Nigeria being an interested party in the Dangote Refinery, why should this conflict of interest between Nigeria and a Nigerian company fester?
So much remains unclear about the game the government, NNPCL and even Dangote, are playing with Nigerians. But that has always been the lot of Nigerians, orphans consistently abandoned at every critical juncture by those whose duty it is to protect them.
The expectation by Dangote that NNPC should come and be a sole buyer of its products is curious. NNPCL has refused to do so. Why should it? Is Dangote a government business? But then, if NNPCL is not buying from Dangote, who is blocking independent distributors from buying, especially if the Dangote price is competitive? So many questions, but the answer is blowing in the air. Meanwhile the subsidy is gone, but the country continues to pay billions of dollars in subsidy. So much crookedness and opacity for any one country to bear. The fact of the great on Dangote Refinery fizzling before the eyes of Nigerians, is very Nigerianesq.
