The NNPC Chief Operating Officer, Refining and Petrochemicals, Mr Mustapha Yakubu, made the announcement at the just-concluded Nigeria Oil and Gas Opportunity Fair.
Oil marketers have expressed divergent views on the proposed acquisition of a 20 per cent stake by the Nigerian National Petroleum Corporation in Dangote refinery.
S&P Global Platts had reported on Thursday 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 Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, told our correspondent that the NNPC needed to clearly state the reasons for the proposed purchase of a 20 per cent stake in the privately-owned refinery.
READ ALSO THIS: Dirty Game: How NNPC reject its own operating refinery to proposed stake acquisition in Dangote refinery under construction
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.”
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.”
An oil and gas expert, Charlotte Essiet, said 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.
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.
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.
The start-up date of this refinery has been repeatedly delayed, after the company first announced the project in 2013.
However, the most controversial leadership of the Lagos Chamber of Commerce and Industry (LCCI) Director General has toed the line of proposal by the Nigerian National Petroleum Corporation (NNPC) to acquire 20 per cent stake in the Dangote refinery.
The Director-General, LCCI, Mr Muda Yusuf, in a statement issued on Thursday in Lagos said the move was a step in the right direction.
The report was that the NNPC had expressed interest in purchasing a 20 percent minority equity stake in the 650,000BPD Dangote refinery.
The NNPC Chief Operating Officer, Refining and Petrochemicals, Mr Mustapha Yakubu, made the announcement at the just-concluded Nigeria Oil and Gas Opportunity Fair.
Yakubu said discussions were already going on with the Dangote Group for the acquisition of the stake which would further ensure undisrupted product supply to Nigerians.
The LCCI DG said the reality was that the Dangote refinery was a project of significant and strategic national importance, even though it was promoted by the private sector.
“Taking a stake in the project also makes a great deal of business sense, especially given how far the project execution has gone and our heavy dependence on importation of petroleum products.
“It also makes both commercial and nationalistic sense for the NNPC to express a interest in a project that has a good prospect to put an end to fuel importation and the associated leakages of public funds.
“It would also ensure the preservation of our foreign reserves as we currently spend billions of dollars annually on importation of petroleum products.
“This is in addition to the several multiplier effects arising from related spin off industries like petrochemicals, fertiliser plants which resonates well with our aspiration for self-reliance and backward integration.
“The export prospects are also quite bright,” he said.
According to him, another exciting thing about this investment proposition is that the NNPC will be a minority shareholder and will therefore not take responsibility for the management of the refinery.
He noted that Nigeria had paid a huge price due to the inefficiency in the management of its public enterprises.
Yusuf said: “The model being proposed with the Dangote refinery is similar in a way to the Nigeria Liquefied Natural Gas company model which remains the best example of how government funds should be invested.
“It is a model that shields the investment from interference by politicians and bureaucrats.
“This proposition is much better than the decision to commit scarce public funds to the rehabilitation of decrepit government-owned refineries.”
