Mixed reactions from oil marketers have trailed the the proposed acquisition of a 20 per cent stake by the Nigerian National Petroleum Corporation (NNPC) in Dangote refinery.
On Thursday S&P Global Platts reported that the NNPC was in advanced talks with Dangote Industries to acquire a 20 per cent stake in the 650,000 bpd Dangote oil refinery.
“Negotiations have reached an advanced stage. We are hoping to wrap up the negotiations before the refinery goes on stream. This is a deliberate move to ensure that the risk associated with refinery business does not weigh solely on Dangote Industries, and also a bold statement that the government is ready to encourage private investors in the building refineries,” a company spokesman was quoted as saying.
The Dangote plant, which will be Africa’s largest refinery, is expected to start commissioning early next-year, according to S&P Global Platts.
An executive director at Dangote Industries, Devakumar Edwin, was quoted as saying on March 1 that overall progress was 90 per cent complete, including design, engineering, and procurement, with construction work around 70 per cent complete.
The start-up date of this refinery has been repeatedly delayed, after the company first announced the project in 2013.
The plant will yield 327,000 b/d of gasoline, 244,000 b/d of gasoil/diesel, 56,000 b/d of jet fuel/kerosene as well as 290,000 mt/year of propane/LPG when fully operational, according to a Dangote presentation given at an industry event last year.
It will also produce 830,000 mt/year of polypropylene, 600,000 mt/year of slurry, 290,000 mt/year of propane and 38,000 mt/year of sulfur.
The Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, said that the shares of Dangote Refinery should be preferably sold to the Nigerian public and that the refinery should be allowed to operate as a private entity without politicizing it.
“Dangote Group, owners of the Dangote refinery, should be allowed to operate the refinery efficiently as a private entity,” Oyebanji told Punch.
“Our experience is that government regulations and policies make decisions around investments like this political. Preferably, the equity should be sold directly to the Nigerian public.”
However, the move by NNPC to acquire 20% stake in Dangote Refinery was seen as a welcome development by the National Operations Coordinator, Independent Petroleum Marketers Association of Nigeria, Michael Osatuyi.
He said, “It should be a good synergy like the Nigerian LNG Limited where the NNPC has a 49 per cent stake; Shell has 25; Total has 15, and Eni, 10. The NLNG now generates billions of dollars in dividends for the Federal Government.
“As long as it is run as a private entity, not under the control of the NNPC, the outcome should be successful.”
An oil and gas expert, Charlotte Essiet, told Punch that if the NNPC ended up being successful in the purchase of the stake, it would be a win-win situation for the corporation and Dangote refinery.
“What is important is that the objective should be met, the country should benefit immensely from the proposed synergy,” the director of corporate and regulatory relations at AOS Orwell added.
Nigeria imports around 1 million-1.25 million metric tonnes/month of petrol due to inadequate domestic refining capacity. All the refineries, with combined nameplate capacity to refine 445,000 bpd of crude oil, are currently shut down.
NNPC says it expects them to operate at around 90% of capacity when repairs are completed, and they resume production by 2023.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.