An International Business Ideation Specialist, Light Shedrack, has said that Dangote Petroleum Refinery and Petrochemicals failed to secure a feedstock agreement with International Oil Companies when he was building the refinery and the firm wants the federal government to bend the rules to the detriment of Nigerians......See Full Story>>.....See Full Story>>
Shedrack said on Monday that any attempt to bend the regulations to favour Dangote would have dire consequences including exits of IOCs and loss of revenue for the government.
The expert said, “I don’t think Dangote has a problem with an Nigerian National Petroleum Company Ltd (NNPC). So far, from my investigation, Dangote has had 39 vessels delivering crude oil to his refinery. So, his problem is not NNPC. But from what I found out, Dangote is asking for something.
“Dangote seems to be wanting the government of the day to bend the rules for him. Dangote’s problem is with International Oil Companies.
“When I took time to go through the issues that have been discussed around Dangote not having enough crude oil, I found out something. I found out that Dangote did not have a workable agreement with the IOCs. Dangote only had an arrangement.”
The expert’s comments come in the wake of a disagreement between Dangote Refinery, the Nigerian National Petroleum Company Ltd and the Nigerian Upstream Petroleum Regulatory Commission over crude oil supply to the firm.
Dangote had earlier said that only 33 per cent of its crude came from NNPC Ltd and later admitted that the NNPCL had supplied 60 per cent of crude oil to the refinery.
The firm had also accused the NUPRC of being “unable to enforce the domestic crude supply obligation”.
But the NUPRC denied the accusation saying that arbitrary revocation of producers’ licenses will hurt the Nigerian economy.
The NUPRC said on enforcement of the Domestic Crude Oil Supply Obligation (DCSO) Regulation 2023, “In the pursuit of its mandate, if it becomes necessary for the NURC to withdraw licenses, the commission will do so but it will not resort to the ‘presumptuous and arbitrary’ withdrawal of licenses because of ‘Sanctity of Contract.’
“However, the regulator as a subject matter expert is of the opinion that arbitrary revocation of licenses is not in the best interest of the country particularly in the era of low investment arising from the onslaught in energy transition.”
NUPRC further revealed that it has facilitated the delivery of 29 million barrels of crude oil to the refinery.
The expert who is familiar with the matter said Dangote did not have very functional feasibility and viability studies of how to secure feedstock.
“Before you build a refinery of that level, it is necessary that you secure an agreement on your feedstock. You have to have guarantees that your refinery will always be flooded with this crude that you will need. Let Dangote come to show Nigeria that there was such an arrangement with the federal government and the IOCs,” the business ideation specialist said.
He explained that IOCs entered an agreement with off-takers before Dangote came on board, adding “So now Dangote coming to say, you must sell to me when there is no existing agreement.”
He added, “Nobody does that. The implication of this is that if Dangote gets the federal government to bend the rules for him to have crude oil, there is every tendency that some of these international oil companies will begin to leave Nigeria and that is going to affect us so terribly. One, we’ll be losing royalties, we’ll be losing taxes that they pay.”
He explained that when the Chairman of the firm, Aliko Dangote was having funding issues, the federal government intervened and secured $1bn funding to facilitate the project.
The expert added, “I don’t think any businessman in Nigeria, any company has enjoyed such leverage from the government. I think they (the government) tend to be telling him, Dangote, you have taken so much from the system.
“Go get money and inject. Bring the money into the economy. I think that is what they are indirectly telling Dangote. You shouldn’t always ask for concessions and tax holidays.”
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