Dangote refinery: Operators seek FG intervention as marketers opt for fuel import

In response to marketers' preference to purchase less expensive imported refined petroleum products rather than support the Dangote Petroleum Refinery, downstream oil industry operators on Monday urged the Federal Government to step in and guarantee the supply of crude oil to the refinery.

Additionally, they denounced as "anti-country practice" the foreign oil companies doing business in Nigeria for selling crude oil to the Dangote refinery at a price higher than the world market.

This occurred at the same time that the Independent Petroleum Marketers Association of Nigeria clarified why distributors were avoiding the aviation fuel and diesel that the Dangote refinery produced due to their higher price.

This was said by IPMAN's National President, Abubakar Maigandi, in response to the Dangote refinery's assertion that it had sold about 3.5 billion litres of refined products to Europe and other countries because some marketers were importing dirty fuels into Nigeria.

According to Maigandi, the refusal of the President of the Dangote Group, Aliko Dangote, to collaborate with IPMAN is another factor affecting the $20bn refinery.
On Monday, Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited, claimed that foreign oil companies in Nigeria were plotting to undermine the new Dangote refinery's ability to survive.

Edwin stated that although the Federal Government of Nigeria granted 25 licences for the construction of refineries, only the Dangote Group fulfilled its commitment.

However, he pointed out that the refinery had exported more than 3.5 billion litres of Dangote diesel and aviation fuel to Europe in the previous few months, accounting for 90% of its total output.

However, in an interview with one of our correspondents on Monday, the IPMAN head accused Dangote of being the reason why operators import diesel because his diesel is more costly.

Maigandi revealed that Dangote did not heed the advice of marketers that the current price of diesel and aviation fuel be reduced to beat competitors in the market.

The IPMAN boss maintained that nobody would be encouraged to import the so-called dirty fuel if the products from Dangote refinery were cheaper.
"The price of the Dangote diesel is the main obstacle. We're expecting him to take a pay cut. He ought to reduce the speed a little bit.

"It is his fault that individuals import diesel into Nigeria from other nations." It is as a result of his cost. As you recall, I previously suggested that he lower his price to deter other marketers from importing. He is more expensive. Why should people shop outside if it's lower? said the marketer.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority was accused by the Dangote refinery official of arbitrarily granting licences to marketers who then imported contaminated refined products into the nation.

Since then, the NMDPRA has remained silent on this, rejecting multiple calls for its reaction to this allegation.

Edwin had said the NMDPRA continued to issue import licences at the expense of the nation’s economy and at the cost of the health of Nigerians “who are exposed to carcinogenic products.”

Edwin lamented that even though Dangote was producing and bringing diesel into the market, complying with the regulations of the Economic Community of West African States, “licences are being issued, in large quantities, to traders who are buying the extremely high sulphur diesel from Russia and dumping it in the Nigerian market.”
He emphasised that up to 25% of the petrol and diesel that is sold in West Africa comes from the ports of Amsterdam, Rotterdam, and Antwerp, and that these fuels contain up to 400 times the amount of sulphur and other pollutants—like the carcinogen benzene—than what is allowed in Europe.

Edwin stated, "The Dangote refinery has expanded into foreign markets as a result of the Nigerian Midstream and Downstream Petroleum Regulatory Authority's decision to indiscriminately grant licences for the importation of dirty diesel and aviation fuel."

The refinery has been exporting aviation fuel and diesel to Europe and other regions of the world lately. As I previously stated, our goal is to expand our economy, but the same industry players opposed us for driving down the price of aviation fuel and diesel.

Nothing to gain

In the meantime, according to the president of IPMAN, Dangote declined to agree to a contract for the distribution of its goods with independent petroleum marketers.

Maigandi claimed that Dangote clung to multinational corporations that he claimed were undermining his attempts to reach a commercial agreement.

Once more, we provided him with a policy directing him to include independent petroleum marketers in direct purchases. He hasn't done that as of yet.

"The concept is that you hold independent petroleum marketers, definitely you are the one who is having the market of the country.

“We told him that he should allow independent marketers to start buying fuel directly from him, but he refused. He just holds on to all these multinational companies. These multinational companies will sabotage his efforts because they will tell him that they would buy, but if they buy a little from him, they will go outside to buy another one that is cheaper than his own,” he stated.

According to Maigandi, Dangote presently distributes his refined goods via MRS, a few depot owners, and other significant marketers.

However, it is preferable that he sells directly to us because independent marketers always purchase his product wherever he goes. Additionally, the people who are selling it there will add their profit margin when we buy, raising the price of the item slightly. Maigandi suggested that he use independent petroleum marketers to market his products.

Elevated cost of crude

The importation of crude oil from the United States, according to a Dangote Group official who spoke under anonymity because he was not authorised to discuss the subject, is to blame for the current diesel price.

Despite claiming Dangote was unable to sell his goods below the cost price, the official stated that international oil companies were denying Dangote access to crude oil to frustrate the refinery.

“If Dangote gets crude oil locally, there wouldn’t be any issue. You know Dangote is importing with dollars. So, there is no way Dangote will sell below the cost price. But these traders are importing dirty fuels from Russia at a cheaper price.
"Because the IOCs won't sell to us, we continue to import crude from the US. That's the issue. We wouldn't be in a crisis if IOCs could sell to us because we would be able to set a price that would satisfy everyone. Observe the current state of the dollar. If we purchase crude at a dollar that is worth N1,484, what is the desired amount for us to sell? However, if we purchase it from Nigeria, the price will go down and it will be less expensive.

"It will be less expensive if the Federal Government permits us to purchase in Nigeria. All we have to do is refine and market. However, since we must import from the US in this instance, it's very expensive. Some people are just playing politics with this thing to frustrate the refinery,” the Dangote Group official stated.

Our correspondent recalls that Aliko Dangote recently recounted how the refinery crashed the price of diesel in Nigeria from around N1,600 per litre to N1,000.
The cost of a litre of diesel is currently about N1,200, which independent petroleum marketers have called excessive.

Remember that Dangote recently declared that by the time he starts selling PMS in the third week of July, Nigeria would not be importing any fuel.

IOCs are criticised by marketers

Oil marketers denounced the IOCs as anti-country for driving up the price of crude oil to the Dangote Petroleum Refinery by roughly $6 per barrel over the world market price.

Under the auspices of the Petroleum Products Retail Outlets Owners Association of Nigeria and IPMAN, the downstream oil dealers announced that the Federal Government ought to order the IOCs to provide crude to the refinery.

Edwin of the Dangote Group had on Monday said the IOCs were deliberately and willfully frustrating the refinery’s efforts to buy local crude by hiking the cost above the market price by $6, thereby forcing the refinery to import crude from countries as far as the US, with its attendant high costs.

He also talked about the importation of dirty fuel into Nigeria due to the licences issued by the NMDPRA
Since then, despite numerous requests to learn the authority's stance on the allegations, the NMDPRA has not commented on this accusation.

Our correspondent asked for more information regarding the Dangote official's claims when he spoke with George Ene-Ita, the NMDPRA spokesman, on Sunday. He received this, but he didn't respond.

Ene-Ita informed our correspondent on Monday that the agency was getting ready to respond with a media release. Up until the time this story was filed, he had not done so.

Billy Gillis-Harry, the president of PETROAN, responded to the Dangote refinery official's disclosures regarding the increase in domestic crude oil prices by IOCs by saying, "That is obviously anti-country! For when you conduct business in a nation, the country’s welfare, well-being and economic growth should be your business.