Marketers Differ on NNPC Proposed Stake Acquisition in Dangote Refinery

Dangote Refinery
S&P Global Platts reported on Thursday that the Nigerian National Petroleum Corporation (NNPC) was in advanced talks with Dangote Industries to acquire a 20 per cent stake in the 650,000 barrels per day Dangote oil refinery.

In the report, a company spokesman was quoted as saying: “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.”

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Oil marketers have expressed divergent views on the proposed acquisition.

The Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, is of the opinion that NNPC needed to clearly state the reasons for the proposed purchase of a 20 per cent stake in the privately-owned refinery.

He said, “Dangote Group, owners of the Dangote refinery, should be allowed to operate the refinery efficiently as a private entity.

“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.”

Reacting to the proposed acquisition, the National Operations Coordinator, Independent Petroleum Marketers Association of Nigeria, Michael Osatuyi, described the move by the NNPC as a welcome development since the corporation would not be acquiring a majority stake in the refinery.

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.”

Charlotte Essiet, an oil and gas expert said it would be a win-win situation for the corporation and Dangote refinery if the NNPC ended up being successful in the purchase of the stake.

“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.

The start-up date of this refinery has been repeatedly delayed, after the company first announced the project in 2013. However, on March 1, 2021, an executive director at Dangote Industries, Devakumar Edwin, was quoted as saying that overall progress was 90 per cent complete, including design, engineering, and procurement, with construction work around 70 per cent complete.

The Dangote plant, which will be Africa’s largest refinery, is expected to start commissioning early next-year, according to S&P Global Platts.

All the refineries, with combined nameplate capacity to refine 445,000 bpd of crude oil, are currently shut down. Due to inadequate domestic refining capacity, Nigeria imports around 1 million-1.25 million metric tonnes of petrol per month.