THE Federal government has allocated a total of 48.6 million barrels of crude oil to Dangote Petroleum Refinery for refining in 10 months.
Official data – Number of Barrels of Crude Made Available to Dangote Refinery Since December 2023 – sighted by Vanguard, yesterday, indicated that 3.4 million barrels were supplied in December 2023 while 3.5 million barrels were delivered in February 2024.
It showed that 3.3 million barrels, 3.3 million barrels and 3.0 million barrels were supplied to the refinery in March, April and May, 2024, respectively. It also indicated that 5.1 million barrels, another 5.1 million barrels, 4.8 million barrels; 5.6 million barrels were supplied in June, July, August and September 2024, respectively, while 11.7 million would be delivered to the refinery in October 2024.
Crude oil to cost N5.4trn
The total of 48.6 million barrels of oil would cost $3.5 billion at the current $72 per barrel crude price, which also translates to N5.4 trillion at the current N1, 541/$ official exchange rate.
The Spokesman of Dangote Group, Tony Chiejina, could not be reached for comments, yesterday.
But sources close to the refinery said the volume supplied remains low when compared to the capacity of the 650,000 barrels per day, bpd plant.
The federal government has not yet disclosed the crude oil requirements of Nigeria’s refineries, including Dangote refinery in the last quarter (October – December) of 2024.
But in the second quarter (April – June) of 2024, the government put the requirements of all Nigeria’s refineries, including Dangote Refinery at 597,700 barrels per day, indicating an increase of 114.700 barrels per day, from 483,000 bpd in the first half of the year.
Meanwhile, investigation indicated many factors, including inconsistent policies and none dedicated crude have hindered the construction and operations of new refineries in Nigeria.
It showed that only a few, including the 650,000 bpd Dangote Petroleum Refinery, have been completed.
In an interview with Vanguard, Wumi Iledare, Professor Emeritus in Petroleum Economics & Policy Executive director, Emmanuel Egbogah Foundation, Abuja, said: “Domestic crude supply is a limiting factor. Usually refinery is not a mom and pop business like retailing petroleum product. Long term crude supply obligation with contact transaction is key. This is evident from what Dangote Refinery is going through.
“There has to be a committed source of crude oil to guarantee 90 to 95 percent capacity utilisation rate for sustained refinery value.”
On his part, the Chief Executive Officer, Centre for Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, said: “Over the years, it has been difficult to get more investors to build refineries because of policy, especially policy on pricing. For several years, we have been operating a subsidy regime with respect to petroleum products.
“It is almost impossible from a private sector point of view for a private investor to operate within a subsidy regime. That is why for about three decades or more, the government has been very dominant in the petroleum downstream.
“The private sector was able to function partially with respect to diesel because diesel has been deregulated. The real issue is about pricing. No private sector will be going into business where prices will be dictated by the government.
“Prices are supposed to be determined by the forces of demand and supply, not by the government. That is why Dangote refinery is located in the Free Trade Zone so that it can export to the global market, if there is a challenge in the domestic market.
“Essentially, that is why people carry licenses for years without been able to effect any concrete investments. We are supposed to do this under the Petroleum Industry Bill, PIB. But that bill took almost two decades for the government to finalise because there were too many interests that wanted the government to dominate.”
“It is a policy issue. It is also a regulatory issue. Policy and regulatory issues are intertwined. Unless we are able to solve that, it would be difficult to get private investors to invest in refinery. I think we are on the right path to making it work with the Petroleum Industry Act, PIA, although it has been difficult to deregulate the pricing of petrol because of the social and political costs.”
