Dangote Refinery Can Sell Products In Pre-commissioning Stage – Analysts

Analysts indicate that the Dangote Refinery, currently at 45 per cent completion and in the pre-commissioning stage, can sell products despite not being fully licensed by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

NMDPRA’s CEO, Farouk Ahmed, emphasised the need for multiple suppliers to ensure energy security, cautioning against reliance on a single refinery.

Ahmed, on Thursday, July 18, expressed concerns about the supply of petroleum products across the country.

“Well, just like you rightly asked, there are lots of concerns about the supply of petroleum products nationwide and the claims by some media houses that we were trying to scuttle Dangote refinery; that is not so,” he said.

However, experts argue that while the refinery is not fully operational, it may still engage in limited sales, raising questions about regulatory oversight and market competition.

An energy expert, Kelvin Emmanuel, said NMDPRA has officials who stay with the refinery for 12 months to check the entire system from mechanical to electrical and monitor the processes.

“After six months of testing wet production, they issue them a provisional acceptance certificate for a licence to operate. After 12 months, they issue them a final acceptance certificate for licence to operate — that test is currently nearing 180 days for PAC,” Emmanuel said.

He added, “Wet production test for pre-commissioning doesn’t mean the refinery is not already in production, it means the refinery is not yet functioning at full capacity utilisation yet”.

“The very fact that the condensation distillation unit has not fully gone into effect is the reason his diesel is currently producing 150-200 parts per million in terms of sulphur content—that will drop to below 50 ppm when all the centrifuges come into operation. It’s utterly disappointing that the NMDPRA chief, in trying to sell a narrative, will attempt to de-market the refinery and mislead the public,” Emmanuel said.

Country manager at Trade Grid and an energy analyst, Jide Pratt, said “Didn’t this same agency give a waiver? why did the agency allow sales into the open market then? or they are unaware the refinery is selling?

He added, “Why is the Port Harcourt refinery that is technically complete not selling and a 45 per cent refinery is selling? Until the President decides to sort out the anomalies in this sector, nothing will change”.

Ahmed said “It has not been licensed yet. We have not licensed them yet. I think they are at about 45 percent completion. So we cannot rely heavily on one refinery to feed the nation because Dangote is requesting that we should suspend or stop all importation of petroleum products, especially Automotive Gas Oil, AGO, or jet kero and direct all marketers to the refinery,” Ahmed said.

Ahmed noted that this situation is detrimental to the nation’s energy security and also harmful to the market due to the potential for monopolistic practices.

“So, in terms of quality, currently, the AGO quality in terms of sulphur is the lowest as far as West Africa’s requirement of 50 ppm,” he said.

“Dangote refinery as well as some major refineries like Waltersmith refinery, produce between 650 to 1200 ppm. So, in terms of quality, their quality is much inferior to the imported quality.”

Recall that the Dangote Group in April had described the allegation as false, baseless, and mischievous, stating that its refinery is designed to produce the highest quality petroleum products that meet very stringent international specifications.

Anthony Chiejina, the company’s spokesperson, made available to newsmen, stressed that “publications indicating that we are producing high sulphur diesel are mischievous and designed to tarnish the image of our reputable organisation.”

“Until late last year, diesel imports into Nigeria were up to 7,000 parts per million (ppm) of sulphur which has been going on for many years. Our diesel is produced currently at significantly lower levels of sulphur; as such, we find baseless the allegation that the reason for the reduction is linked to quality. What we are producing is 80 per cent better than what is being imported into the country,” Chiejina said.