Nigerian National Petroleum Corporation (NNPC) expects the Dangote Refinery project to take off in the first quarter (Q1) of 2023, its Group Managing Director Mele Kolo Kyari said on the sidelines of the World Gas Conference yesterday in Daegu, South Korea.
NNPC acquired a 20 per cent stake in the 650,000-barrel-per-day refinery in Lagos, he added, owned by Africa’s richest man Aliko Dangote, for $2.76 billion last year, according to Reuters.
Nigeria, Africa’s biggest crude oil exporter, imports virtually its fuel due to moribund state refineries, which has prompted NNPC’s interest in Dangote’s oil refinery.
Separately, Kyari said contractors were on site for the country’s liquefied natural gas (LNG) expansion project.
The Train 7 project is expected to be completed in four years, he said.
Nigeria LNG (NLNG) and joint partners, NNPC, Shell SHEL.L, TotalEnergies TTEF.PA and Eni ENI.MI, agreed in 2019 to add a new train to its LNG plant at Bonny Island which will increase its output to 30 million tonnes per annum (mtpa) from 22 mtpa.
The Federal Government is banking on Dangote Refinery to end its fuel importation woes. According to experts, expenditure on subsidies has now hit N6 trillion because of the price of crude oil which has remained above $100 per barrel.
This was the view of a panel of discussants that participated at the Centre for Petroleum Information (CPI) Oil & Gas Law Forum, entitled: “Implementing Petroleum Industry Act (PIA) 2021: Fixing arising legal issues.”
According to the speakers, the price of crude oil was between $55 and $60 per barrel when the Federal Government raised the budgeted to N4 trillion. But now the price is over $100 per barrel.
The cash spent on subsidies between 2010 and 2020 was N1.4 trillion. The cost increased substantially last year and in the year, it has hit the stratosphere.
Giving a five-year breakdown of the subsidy trajectory, Emeka Akabogu, one of the speakers at the forum, said the cost of fuel subsidy has increased by 890 per cent between 2017 and 2021 with only 12 per cent increase in the price of fuel.
Akabogu lamented that by paying subsidy the government has been violating the Petroleum Industry Act which it put in place. This situation, he said, could bring about integrity challenges in government policies, because investors’ confidence is being eroded.
He wondered what the removal of fuel subsidy would entail. He said it meant the market is deregulated and that there is much more revenue for the government to divert to areas of need. It also meant that operations or investment in the industry with regards to retail stations, storage tanks distribution net and haulage and the likes will increase significantly, with efficiency at its best. This was what was envisaged with the passage of the PIA, he said.
He added: “The government had said it was going remove subsidy by the middle of the year. But at the beginning of the year the price of crude oil went up, and with election year in sight, the government obviously capitulated to the sentiment that is being expressed by the general public and decided that it would continue with fuel subsidy.”
The PIA, he said, was unequivocal regarding the deregulations of pricing of petroleum products in Nigeria because the Act stated that the prices of petroleum products shall be based on market price or forces of demand and supply.
He said the Federal Government is breaking the law by its continuous payment of subsidy, adding that the PIA is enforced but essentially the free market regime is not in force.
He said the opportunities in implementing the PIA are huge and better than trying to maintain it at the expense of other sectors of the public service
Removal of subsidy, he said, gives the operators more control over their profit, allowing them to set cost-reflective prices for their products, he said.
He added that the sovereign sanctity of the PIA is being eroded by the government’s refusal to allow full deregulation of the downstream sector of the petroleum industry.