Nigerians lambast regulatory agency over Dangote Refinery’s monopolistic claim

• Allegations abound in the NMDPRA over claims that Dangote refinery's diesel products are inferior to foreign goods
• Energy experts express worries that Nigeria's oil and gas industry may suffer as a result of the current dispute
• An analyst said that the NMDPRA chief, in trying to sell a narrative, will attempt to de-market the refinery and mislead the public

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

The ongoing public dispute between Dangote Industries Limited and the Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) could have a negative impact on Nigeria's oil and gas sector, which is essential to the continent's largest economy but has seen too few investments.

The refinery's diesel products are said to be inferior to those that are imported, according to many charges made by NMDPRA. Photo Credit: FG, Dangote Refinery
Source: UGC

BusinessDay reported that half of Nigeria's daily oil output might be processed by the $20 billion Dangote complex, which is located outside of the commercial hub of Lagos, once it is completely operational.

However, NMDPRA is full of accusations that the refinery's diesel products are inferior to those that are imported.

In response, Dangote Industries Limited has condemned a report criticising the quality of its products, stating that its diesel is 80% superior to the ones imported from abroad.

How Nigerians are reacting

A senior source in Nigeria’s oil and gas sector told BusinessDay,

“Dangote refinery contributes to our gross domestic product (GDP), reduces our dependency on imports and the pressure of our scarce FX, and above all, creates direct and indirect jobs.” “We all know that there are economic saboteurs who, for selfish reasons, never want this to work. Therefore, using their corrupt proxies in government, they intend to frustrate this refinery.”

Luqman Agboola, head of energy and infrastructure at Sofidia Capital said,

“Regulatory uncertainty is a disincentive to oil and gas investment because it hampers the future of business operations, while infrastructure decay increases the cost of production, affects competition, and erodes companies’ profitability.”

He pointed out that the oil and gas industry will be disproportionately affected by any factor that hinders foreign investment, harming participants throughout the value chain and depriving the nation of potentially significant energy transactions.

Investors in the oil and gas industry face significant challenges due to political and regulatory uncertainties, according to Juwon Adebayo, an energy and environmental lawyer with Center for Energy Resources Consulting.

Investors would therefore do a great deal of due diligence before making an investment there to make sure that these risks are sufficiently addressed or reduced.

The regulator's remarks, according to Charles Ogbeide, an energy expert with an investment bank in Lagos, were careless.

“That their products are inferior is an unfortunate statement that indicates that he has a personal grudge against Aliko Dangote,” he noted.

Energy economist Kelvin Emmanuel, a board member of Obsidian Archenar Nigeria, stated that NMDPRA staff have been stationed at the refinery for a period of 12 months in order to inspect and monitor every aspect of the system, from mechanical to electrical.

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

NMDPA replies Dangote over crude non-supply

Legit.ng reported that the Nigerian federal government has declared that, in addition to the goods produced by the Dangote Petroleum Refinery, it will continue importing refined petroleum products into the nation in order to prevent monopolies and preserve energy security.

It emphasized that over reliance on the $20 billion refinery located in the Lekki Free Zone of Lagos was advised, and that the company's demand that all oil marketers buy their products from it is a detriment to competition.

The House of Representatives established an ad hoc committee to investigate claims that crude oil was not supplied to the Dangote refinery, following criticism from oil marketers that the International Oil Companies (IOC) operating in Nigeria had failed to supply crude to local refiners.

Source: Legit.ng