… as the Naira-for-crude deal between NNPC and Dangote Refinery kicked off today
Again, the Port Harcourt Refinery missed the September timeline to roll out. This means that the frustration of Nigerians as regards democratizing the source of locally produced petrol, despite the coming up of Dangote refineries, which will start buying crude oil in Naira today, as against the dollar continues.
However, the non-coming up of Port Harcourt Refinery this time around did not arise from the point of view that the government officials are telling lies, or attempting to deceive Nigerians but from a purely technical point of view which was not envisaged at this critical period of the nation’s economic crisis blamed on price of petrol.
Narrating his frustration to Business Standards, a source said. “It would have been better for the NNPCL/ government to shift the timeline to December, perhaps, at that time a lot of the problems that are coming up now would have been resolved. The technical must be resolved completely before this refinery must come on stream”
He said the government and not NNPCL should review some of its policies that have negatively impacted all aspects of the economy.
According to other sources within the refinery, the contract was awarded at an exchange rate of N450/$1, but, today, the exchange rate has ballooned to N1,500, or even N1,600 to $1. A situation some of the workers in the refinery are saying has made it extremely difficult for many of the contractors to carry on with their jobs.
The payment of the jobs are based on milestone reached by each contractor. They are not paid all the money at once, a source said.
This has also placed an unexpected financial burden on the Nigerian National Petroleum Company Limited (NNPCL) and the Federal Government as they may be forced to review the price.
They said the jobs are awarded in phases, meaning that one phase must be completed before you move to another phase. It is in –between these situations that the exchange rate has fluctuated several times. The resultant effect of this is that, it has become difficult to procure the needed materials for the job, a worker disclosed to Business Standards.
Other issues are the technical problems that propped up while testing running some sections of the plant. Some of the equipment that were assessed to be good enough to function, disappointed the handlers of the refinery. When the new equipment was installed and they tested them, the old equipment that was not changed was said to have collapsed, in the course of the exercise.
This development came up with another challenge that must be attended to compulsorily by the handlers. This made it expedient for them to order for new equipment that were not put into consideration earlier.
Meanwhile,the Technical Sub-Committee on Domestic Sales of Crude Oil in Local Currency, on Sunday, confirmed that the supply of crude in naira by the Nigerian National Petroleum Company Limited to the Dangote Petroleum Refinery is to begin on Tuesday, October 1, 2024.
On September 13, 2024, the committee announced that the Federal Executive Council under the leadership of President Bola Tinubu approved the sale of crude to local refineries in naira and the corresponding purchase of petroleum products in naira.
“From October 1, NNPC will commence the supply of about 385kbpd (385,000 barrels per day) of crude oil to the Dangote refinery to be paid for in naira,” the committee had declared.
The Chairman of the Technical Sub-Committee is Zacch Adedeji, who doubles as Chairman of the Federal Inland Revenue Service.
When contacted on Sunday and asked if the plan for the crude oil supply to the $20bn Lekki-based plant is still intact, the Special Adviser on Media to the FIRS Chairman, Mr Dare Adekanmbi, responded in the affirmative.
He said, “I can confirm to you that the Chairman, Sub-Technical Committee, Zacch Adedeji, is working day and night to ensure that things go according to plans. He knows how important it is to have the agreement implemented as has been planned for the benefit of Nigerians.”
This implies that NNPC is to supply about 11.5 million barrels of crude oil to the Dangote refinery monthly, and based on the deal, the plant will release equivalent volumes of refined diesel and petrol to the domestic market also in naira.
The panel explained in September that this initiative would help reduce pressure on the naira, eliminate unnecessary transaction costs, and improve the availability of petroleum products across the country.
“Since then, the implementation committee chaired by the Minister of Finance and we, the technical committee, have worked intensely with NNPC and Dangote refinery to fashion out the details of the modalities for the implementation of the FEC approval,” Adedeji had stated.
While stating that crude would be sold to Dangote in naira from October 1, the committee chairman and FIRS boss said, “In return, the Dangote refinery will supply PMS (petrol) and diesel of equivalent value to the domestic market to be paid in naira.
“Diesel will be sold by the Dangote refinery in naira to any interested off-taker. PMS will only be sold to NNPC. NNPC will then sell to various marketers for now.
All associated regulatory costs (NPA, NIMASA, etc.) will also be paid in naira. We are also setting up a one-stop shop that will coordinate service provision from all regulatory agencies, security agencies, and other stakeholders to ensure a smooth implementation of this initiative.”
Adedeji explained that the technical committee that worked to flesh out the initiative would transition to an implementation execution and monitoring committee working out of Lagos for the next three to six months.
The committee, which includes the Permanent Secretary of the Federal Ministry of Finance, Mrs Lydia Jafiya; the FIRS boss, as well as representatives from NNPC, Central Bank of Nigeria, AfreximBank, and the Nigerian Upstream Petroleum Regulatory Commission, was set up to craft a robust template that will ensure the successful implementation of the initiative.
Meanwhile, modular refineries have called on the government to work out modalities for supplying crude to their plants as well.
About 24 hours before the commencement deal, the modular refiners told one of our correspondents that they were not involved in the scheme of things.
