… Dangote insists its diesel is finest in Nigeria

… Seems to Libya, Angola, others for crude oil

Nigeria’s oil and fuel sector, the lifeblood of Africa’s greatest financial system, the place investments have been too few and much between, might be taking a success because of the ongoing public disagreement between Dangote Industries Restricted (Dangote) and the Nigerian Midstream and Downstream Petroleum Regulatory Company (NMDPRA).

If it turns into totally operational, the $20bn Dangote facility, Nigeria’s greatest single native funding positioned within the outskirts of Lagos, may course of half of Nigeria’s day by day oil output.

But what needs to be a second of satisfaction for the nation’s most necessary industrialist is swamped with allegations from Farouk Ahmed, head of NMDPRA, who publicly stated the refinery’s diesel merchandise are inferior to imported ones.

Learn additionally:Nigeria’s danger profile seen rising on Dangote-NMDPRA dispute

Ahmed’s assertion sparked a big public backlash. Many consultants discovered his remarks unacceptable, arguing that they undermined a significant native business and didn’t mirror the true high quality of the refinery’s merchandise.

“I’m really shocked that the NMDPRA boss nonetheless has a job. Isn’t it the objective to cut back or get rid of the necessity for imports? Nigeria spends $2.4 billion month-to-month on vitality imports. With a totally operational Dangote refinery, we may produce 49.4 million liters of PMS, 26 million liters of diesel, and 12 million liters of Jet A1 day by day,” Kelvin Emmanuel, an vitality economist and board member at Obsidian Archenar Nigeria, stated.

He added, “So, his diesel is means higher than what’s imported into Nigeria and if the Nationwide Meeting desires to go a step additional, they will recruit SGS, which is likely one of the respected gasoline testing companies on the planet, and in addition PWC or KPMG to do an audit of the third-party rubbing roundtable certifications course of for AGO and gasoline.

“The query is, Nigeria has been importing petroleum merchandise for 52 years. Within the final 20 years plus, the federal government has spent N12 trillion in turnaround upkeep and the refineries are nonetheless useless. For my part, I don’t suppose these refineries needs to be relied on in any case. So, if an entrepreneur takes up the problem of investing $20 billion to construct a refinery, the federal government ought to help him.”

Luqman Agboola, head of vitality and infrastructure at Sofidia Capital, stated regulatory uncertainty is a disincentive to grease and fuel funding as a result of it hampers the way forward for enterprise operations, whereas infrastructure decay will increase the price of manufacturing, impacts competitors, and erodes corporations’ profitability.

Learn additionally : Dangote blames NNPC’s ahead oil gross sales for refinery’s lack of crude

He famous that any issue that impacts international funding will disproportionately hit the oil and fuel sector, affecting gamers throughout the worth chain and inflicting the nation to lose out on probably giant vitality offers.

“Regulatory and political dangers are actual complications for buyers within the oil and fuel sector. As such, previous to investing there, buyers undertake in depth due diligence to make sure that such dangers are adequately addressed or mitigated,” Juwon Adebayo, vitality and environmental lawyer at Heart for Power Sources Consulting, stated.

Nigeria’s elevated regulatory danger can be coming at a time there may be mounting world advocacy aimed toward halting all-new Ultimate Funding Selections (FIDs) for fossil fuels, particularly oil and fuel. The state of affairs could create severe hurdles for brand new subject improvement as over $150 billion price of tasks danger getting stranded in Nigeria.

Charles Ogbeide, vitality analyst with a Lagos-based funding financial institution, stated the feedback from the regulator had been reckless.

“The refinery is within the phases of completion and commissioning. They’re producing AGO and it’s regular for his or her sulphur stage to be excessive for now,” Ogbeide stated.

“That their merchandise are inferior is an unlucky assertion that signifies that he has a private grudge in opposition to Aliko Dangote,” he stated.

Jide Pratt, nation supervisor at Commerce Grid and an vitality analyst, stated: “Didn’t this similar regulator give a waiver? Why did the company enable gross sales into the open market then? Or are they unaware the refinery is promoting?

He added, “Why is the Port Harcourt refinery that’s technically full not promoting and a forty five p.c refinery is promoting? Till the President decides to kind out the anomalies on this sector, nothing will change.”

Value greater than $15bn, in line with Bloomberg, Dangote has loved cozy relationships with Nigerian leaders. They think about him a champion of home business because the nation’s largest employer outdoors of the Federal Authorities and one of many nation’s highest taxpayers.

Aliko Dangote, president of Dangote Group, stated the refinery has continued to obtain repeated orders for its merchandise from all those that have bought the identical because the graduation of manufacturing.

Talking throughout a tour of each Dangote Petroleum Refinery & Petrochemicals and the Dangote Fertiliser Restricted advanced by members of the Home of Representatives on Saturday, Dangote questioned why a regulatory authority just like the NMDPRA that ought to shield native industries is castigating the latter and even mendacity within the media to justify the necessity to proceed the importation of soiled gas into the nation.

“Demarketing of an organization by a regulator that’s supposed to guard it, could be very unlucky,” Dangote stated.

He overtly challenged the regulator (NMDPRA) to match the standard of refined merchandise from his petroleum refinery with these imported, whereas advocating for an neutral evaluation to find out what finest serves the pursuits of Nigerians.

“We produce the perfect diesel in Nigeria. It’s disheartening that as a substitute of safeguarding the market, the regulator is undermining it. Our doorways are open for the regulator to conduct assessments on our merchandise anytime. Transparency is paramount to us,” Dangote stated.

“Our samples present a sulphur content material of 87.6 ppm, roughly 88, whereas the others exceeded 1,800 ppm. Though the NMDPRA permits native refiners to provide diesel with sulphur content material as much as 650 ppm till January 2025, as accredited by ECOWAS, ours is considerably decrease. Subsequent week, we goal to attain 10 ppm, aligning with the Euro V normal. Imported diesel is capped at 50 ppm, however as you may have seen, these from the stations, imported by main entrepreneurs, fall nicely outdoors this normal,” Dangote noticed.

Regardless of being Africa’s largest oil producer, Nigeria grapples with points resembling theft, pipeline vandalism, and low funding. Because of this, Dangote has needed to import crude from distant sources resembling Brazil and the USA.

“We’re speaking to Libya about importing crude. We are going to discuss to Angola as nicely and another international locations in Africa,” Devakumar Edwin, Dangote refinery senior government, instructed Reuters.

He added that worldwide merchants and oil corporations are among the many largest consumers of Dangote’s oil, a lot of which is being exported.

“The most important off-takers are the massive merchants, Trafigura and Vitol and BP, and to some extent, even TotalEnergies. However all of them are saying they’re taking it offshore,” Edwin stated.

Merchants and delivery information point out that Dangote is ramping up gasoil exports to West Africa, capturing market share from European refiners.

Edwin said that Dangote’s oil buying and selling arm is now operational, with workers based mostly in London and Lagos, to handle provides and promote merchandise.