3 months ago
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Some experts in the oil and gas sector have said Nigeria was not ripe to stop the importation of refined petroleum products, asking the Nigerian Midstream and Downstream Petroleum Regulatory Authority not to bow to pressure.
The experts stated this in the wake of allegations by the NMDPRA Chief Executive, Farouk Ahmed, that the Dangote refinery wanted him to stop issuing licences for the importation of fuel.
Ahmed held that he did not grant the request to avoid monopoly and ensure energy security in the country.
The comment from the regulator appeared to have irked Nigerians, many of whom called for his removal.
Speaking with our correspondent, an energy consultant, Henry Adigun, condemned the NMDPRA for making comments about the Dangote refinery in public.
He held that most of the things said by Ahmed were true, but they sought not to be made public.
According to Adigun, Nigeria should only stop fuel importation when at least three to four refineries are working in the country.
“We cannot stop the importation of fuel now until we have about three to four functioning refineries. We cannot have our energy security in the hands of one person, that’s what the NMDPRA chief executive was trying to say, but it shouldn’t have been a discussion for the press,” Adigun stated.
He added that the government should also consider other investors in the midstream, who may be affected by the sudden stoppage of importation.
The expert noted that depot owners were protected by the Petroleum Industry Act to import fuel, saying that right cannot be taken away from them by a fiat.
According to Adigun, those importing fuel at the moment naturally patronise the Dangote refinery when the price is better than going outside the country to import fuel.
Contrary to speculations, Adigun maintained that it was not feasible that the Dangote refinery would crash the pump price.
He argued that the cost of crude, whether supplied locally or in naira, would be priced according to the international benchmark.
He disclosed that the landing cost of petrol is now around N1,100, which has a lot to do with the cost of production.
However, Adigun said that could only happen if the Nigerian National Petroleum Company Limited and Dangote have an agreement to sell at a fixed price without recourse to the international benchmark and the fluctuating foreign exchange rate.
Another energy industry expert, Dr Taiwo Ogunleye, said petroleum has remained an important part of the world’s energy mix and the global economy and a cornerstone of the modern energy system, helping to drive the global economy.
He posited that Section 317(8) of the PIA provides that the NMDPRA should apply the backward integration policy to encourage investment in local refining in the downstream petroleum sector.
Similarly, Section 317(9) of the PIA empowers the regulator to assign import licences to companies with active local refining licences or proven track records of international crude oil and petroleum products trading for product shortfalls.
Those powers, he said, should not be hijacked from the regulator under any guise.
The expert noted that import volume allocation should be based on criteria set by the NMDPRA based on refining output in the preceding quarter, share of active wholesale customers, competitive pricing, and prudent supply, storage, and distribution track records, according to Section 317(10) of the PIA.
“The imported petroleum products must conform to Afri-5 Specification (50 ppm sulfur) as per the ECOWAS declaration on adoption of the Afri-Fuels Roadmap or as prescribed by regulation,” he stated.
However, according to the Publicity Secretary of the Crude Oil Refiners Association of Nigeria, Eche Idoko, the government must put a stop to importation as early as possible.
Idoko said local refiners could supply the fuel needed for local consumption if the government fulfils its promise to supply crude to local refineries in the local currency.
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