FG must stop mortgaging Nigeria’s crude oil for loans __Dangote
Sopuruchi Onwuka
Promoter of Africa’s largest single train refinery, Alhaji Aliko Dangote, has admonished government against scramble for resource revenue and mortgaging the future of the country for temporal benefits.
The versatile investor, whose Dangote Refinery is at the center of the prevailing crude feedstock supply crisis ravaging the domestic crude oil processing industry, stated at the just concluded conference hosted by the Crude Oil Refinery-Owners Association of Nigeria (CORAN) in Lagos that collateralizing greater portion of the country oil production in the futures market for quick loans is unfortunate.
His remarks amplify the chorus of condemnations that shroud acute crude oil shortages that have threaten evolving domestic refining industry with debilitating redundancies.
The Oracle Today reports that the commissioning of the 650,000 barrels per day Dangote Refinery had exposed acute shortfall in the volume of oil available for sale by the country. It became clear that the government of former President Muhammadu Buhari had during his last days in office sunk deep holes in the nation’s revenue channels with forward sales of the country’s crude oil for immediate cash.
The commitment of the nation’s crude oil supplies to lenders had weakened the ability of the upstream petroleum industry to respond to domestic demand for feedstock when the long anticipated private reining projects started coming online.
The situation which left smaller players in the industry in hushed gasps had spurred a brazen spat between the promoters of Dangote Refinery on the one hand and the officials of the Nigerian National Petroleum Company (NNPC) Limited, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and some marketing groups on the other hand.
Surging with influence and power, Alhaji Dangote had galvanized political and industry stakeholders in securing a presidential approval for domestic crude oil supply obligation to the nation’s local refineries, a replica of the gas supply obligation to generating companies in the power sector.
The shrewd businessman has also wrestled the national oil company over public sector supply monopoly and associated price manipulations which threaten liberalized offtake from the refinery.
Despite the spate of huge public altercations between Dangote and government agencies in the industry, the biggest issue that has defied management remains the acute shortfall in the volume of crude oil available for supply to refineries that are not integrated to upstream exploration and production operations.
President of the Trade Union Congress (TUC), Comrade Festus Osifo, had at a meeting with media executives declared that mindless borrowings by the past Buhari administration plunged Nigeria into deep fiscal crises that compel desperate dismantling of all social benefits including fuel subsidy by the incumbent Tinubu administration of the federal government.
The leader of Nigerian senior service workers who also doubles as the President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) explained that acute shortage in foreign exchange earnings from the petroleum sector resulted from the crude oil backed loans mopped up from traders and refiners by the Buhari government.
Fallouts from the bad loans, he said, have led to the devaluation of the Naira, surging inflation and consequent jumps in fuel prices.
In absolving local refiners from blame in the prevailing high prices of fuel, Comrade Osifo stated that the cost profile of the refinery business is also directly vulnerable to foreign exchange rate as both materials and commodities in the industry are transacted in dollars.
Comrade Osifo who was explaining why the organized labour refused to join the EndBadGoverance protest in the country criticized Nigerians for making wrong choices at the polls by electing bad leaders and still expect the organized labour to take responsibility for the consequences.
In giving a similar admonition in a summit hosted by CORAN to pull stakeholders’ convergence on critical issues hampering smooth revival of domestic refining business in the country, Alhaji Dangote made it clear that “we will need to stop mortgaging crude” to ensure sufficient feedstock availability.
“It is unfortunate that while countries like Norway are putting oil proceeds into a future fund, in Africa we are spending oil proceeds from the future. We will also need to prioritize implementation of the domestic crude supply obligations,” he stated in presentation delivered on his behalf at the event.
In also pointing out that Nigeria’s refining capacity currently at 1.137 million barrels per day is growing faster than that its crude oil production of about 1.2 mbd, Alhaji Dangite pointed out that “we will need to expand our crude oil production capacity to support demand from new refining capacity.”
Growing crude oil production, he stated, entails fast tracking of asset divestments by International Oil Companies (IOC s) to indigenous, as well as other initiatives.
“As a vibrant exporter of refined products, Nigeria will witness an improvement in its balance of trade and generate much needed foreign currency,” he stressed.
