It is understandable that the Nigerian National Petroleum Company (NNPC) Limited is anxious and expectant that the Dangote Refinery, the largest privately constructed and owned facility of its kind in the world, takes off on schedule next year as projected. The actualisation of this objective will help halt the prevalent practice of exporting crude oil and importing refined petroleum products, with negative implications for the domestic price of these imported products, as well as end the humongous amounts purportedly paid as subsidy to bridge the gap between the importation costs and the pump price.

With the current dependence on importation of refined petroleum products, for instance, Nigeria, unlike most other oil-producing nations, is unable to benefit from the sharp rise in the international price of crude oil as a result of the ongoing Russian-Ukraine war. Thus, subsidy payments have increased further in Nigeria as the rise in international crude oil prices has resulted in increased cost of refined products.

Expressing the optimism of NNPC Limited as regards the anticipated coming on stream of the Dangote Refinery, NNPC’s Chief Executive Officer, Mr. Mele Kyari, has said that “NNPC owns 20% equity in the Dangote Refinery. We’re not only owning 20% equity, we also have the first right of refusal to supply crude oil to the plant. Projection for the plant’s completion is the first quarter of next year. If it does, this refinery alone, because it has the ability to produce 650,000 barrels per day capacity and different technology can crack crude in a manner that you can have more gasoline than a typical refinery”. Although a commendable and patriotic endeavour on the part of Alhaji Aliko Dangote, it is sad and unfortunate that a sovereign country like Nigeria has to wait on a private initiative to meet a critical and sensitive national need. Even then, the potential of the Dangote Refinery to help stop the importation of refined petroleum products and bring an end to the wasteful expenditure on subsidy payments widely perceived to be riddled with corruption is welcome and commendable.

However, beyond the take- off of the Dangote Refinery, Mr. Kyari was confident that with the completion of its ongoing refurbishment of its own now largely moribund refineries as well as modular and condenser refineries currently being built, “You will see that this country will become a net exporter of Petroleum Motor Spirit (PMS) not just to the West Africa sub-region but to the rest of the world. This will happen – the flow of supply will change by the middle of next year”. Given the country’s unsavory experience with publicly owned and managed refineries over the years, it is pertinent to wonder if it would not be wiser and better to leave the construction and management of refineries entirely to the private sector.

But there is certainly the need for greater clarity and transparency as regards the details of the arrangement through which the NNPC Limited has acquired the first right of refusal to supply the Dangote Refinery with about 300,000 barrels of crude oil per day for the next 20 years. On what terms will this crude oil be supplied to Dangote Refinery? Will it be at a subsidised rate and if so, why? We already know that some entrepreneurs are investing in modular refineries and that happily should undercut any try at monopoly. However, why should the arrangement for the NNPC to supply crude oil to Dangote Refinery last for 20 years? Why not for a period of five years for example, at least in the first instance? The impression must not be created that the inefficient and utterly failed public monopoly in the ownership and management of refineries is being replaced with a private behemoth that might choke others.

What we want is an efficient refining system that is not only fair but efficient. The Dangote project is a good start in a pathway forward.

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