SUCCESS NWOGU writes on the strategy by the Nigerian National Petroleum Company Limited (NNPCL) to end importation of premium motor spirit (PMS) popularly known as petrol
The humungous amount of money the Federal Government has been spending and occasional fuel scarcities experienced by residents in Nigeria, the attendant hardship and losses incurred by businesses and individuals have been worrisome to many.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, during the presentation of the 2023-2035 Medium Term Expenditure Framework & Fiscal Strategy Paper in Abuja, said the Federal Government projected spending N6.7 trillion on petrol subsidy payments in 2023.
Speaking at a hearing of the House ad hoc committee investigating the petroleum subsidy regime from 2017 to 2021, she projected daily payment for fuel subsidy at N18.39 billion. “The total amount of subsidy per day is 18.397 billion per day. “So, if you are projecting for the full year, it would be 6.715 trillion,” she said. According to the finance minister, this was calculated using the information provided by NNPCL and the regulator.
She said NNPCL’s information showed that 64.96 million litres of fuel were the projected average daily truck-out, adding that N1.774 trillion was paid to independent oil marketers as subsidy in four years. Tbe World Bank, International Monetary Fund and many experts have warned against the negative effects of such fabulous spending.
NNPCL’s inspiring information
The information from the Group Chief Executive Officer (GCEO), NNPCL, Mele Kyari, that the combination of output from state-owned refineries and the Dangote Refinery, which, he said, was scheduled to begin operation next year, would eliminate the importation of petroleum products into Nigeria, possibly by mid-2023, therefore is inspiring.
Kyari, speaking at the 49th Session of State House briefing in Abuja, emphasised the strategic role the Dangote Refinery would play in eliminating petroleum product importation into Nigeria and even transforming the country to an export hub for petroleum products.
Four refineries unable to meet demand
The NNPCL GCEO had explained that even if all the nation’s four refineries in three locations were operating at 90 per cent of installed capacity, they would only be able to raise 18 million litres of PMS. According to him, that means even if all of them are working today, there would still be a net deficit of PMS to import into Nigeria, which emphasised the key role the Dangote Refinery will play in breaking the importation of petroleum products and ensuring their availability in Nigeria.
Kyari said: “We have locked down ability to sell crude oil for 33,000 barrels minimum by right for the next 20 years and by right also we have access to 20 per cent of the production from that plant (Dangote). “The combination of that and our ability to bring back our refinery will eliminate any importation of petroleum products into this country next year.
You would not see any importation into this country next year.” The GCEO said Dangote refinery would begin producing by the middle of next year, adding that it can produce up to 50 million litres of PMS.
Dangote Refinery
Dangote Petroleum Refinery covers an area of approximately 2,635 hectares and is located in the Lekki Free Trade Zone in Lagos.
The refinery, which is designed to use the latest technology to comply with stringent guidelines and regulations to protect the local environment and, at the same time, produce the latest environmentally friendly petroleum products for worldwide markets, will produce Euro-V quality gasoline and diesel as well as jet fuel and polypropylene is designed to process a large variety of crudes including many of the African crudes, some of the Middle Eastern Crudes and the US Light Tight oil.
Capacity/worth
It has the capacity to refine 650,000 barrels of crude oil per day, while the petrochemical plant has the capacity to produce 900,000 metric tonnes per year (MTPY) of Polyproylene. Dangote’s investment in petroleum refining, petrochemical and fertiliser are in excess of $22.5 billion, according to the company.
The refinery can meet 100 per cent of the Nigerian requirement of all liquid products (gasoline, diesel, kerosene and aviation jet) and also have a surplus of each of these products for export.
Explaining the fuel requirement in Nigeria and supply from the Dangote refinery, the company said the plant had the capacity to produce a total of 99 million litres of gasoline, kerosene, jet fuel and diesel, per day.
It further explained that the consumption requirement of the nation is a total of 61 million litres per day of petroleum products, while the surplus, therefore, is 38 million. Giving details, it said the plant could produce 53 million litres of gasoline per day, while the nation’s consumption propensity is 33 million litres per day, leaving a surplus of 20 million.
The refinery also has a production capacity of 10 million litres of kerosene per day, while the nation’s consumption ability is nine million per day, leaving a surplus of one million litres. It can also produce 34 million litres of diesel per day, leaving a surplus of 38 million litres per day as the country can consume about 61 million litres.
The refinery has 177 tanks with 4.742 billion litres capacity and a total tanker loading of 2,900. This number is based on a tanker capacity of 33 KL. It said: “The Dangote Refinery project is particularly complex, featuring engineering, procurement, construction, pre-commissioning and related storage facilities, all located in the Dangote Industries Free Zone Area of Ibeju-Lekki, Lagos.
“Dangote is one of the few companies in the world executing a petroleum refinery and a petrochemical complex directly as an Engineering Procurement and Construction (EPC) Contractor. Globally, apart from these companies, no individual owner has done the complete EPC Contract for a Petroleum Refinery. “A total number of temporary housing in the premises is 33,000 people.”
Global design
The refinery design, according to the company, conforms to World Bank, United States (US), United States Environmental Protection Agency (EPA), the European Union (EU), and the defunct Department of Petroleum Resources (DPR) emission/ effluent norms. The DPR has now been renamed the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
The fefinery has its own dedicated steam and power generation system with adequate standby units of reliable/uninterrupted utility supply to operating plants.435 Power plant in refinery. It added that it had a self-sufficient marine facility with the ability for freight optimisation; the largest single order of 5 SPMs anywhere in the world; Crude SPM for unloading ships up to ULCCs; 3 product SPM for product exports up to Suez Max vessels and 2 X 48” subsea crude pipelines with interconnection.
According to the management, it also has 6. 3 X 24” subsea pipelines for products and imports, .120 km subsea pipeline; and crude offloading capacity – 100,500 barrels/hour (17.25 million litres/hour as well as product loading capacity of 77,000 barrels/hour (12.32 million litres/ hour). The document said: “Dangote industries has developed a port and constructed quays with a loading bearing capacity of 25 tonnes/sq meters to bring Over Dimensional Cargoes close to the site directly to handle liquid cargoes.
The jetty is situated at a distance of 12.3 km from the refinery thereby effectively reducing the travel time. “Dangote Petroleum Refinery maintains high standards for all its business practises, valuing health, safety, environment and rights for its employees, compliances with all applicable local and international laws, and being a committed partner to communities, governments and the environment.”
Job creation
The refinery, which has over 1,029 trucks, to improve the capacity of the local logistics, has an employment generation-load of over 100,000 indirect employment at retail outlets; 26,716 filling stations and 129 depots in Nigeria to ensure ease of availability of products and help open up service stations; as well as 16,000 trucks for transport which will create additional jobs. Currently, over 30,000 people, according to the company, are working at the petroleum refinery project site, through various contractors.
When operational, the petroleum refinery is going to generate over 100,000 direct and indirect jobs for Nigerian youths. To be compliant with local content development necessities, Dangote Refinery said it had trained over 400 artisans selected from host communities in the areas of masonry, carpentry, AC electricians, plumbing, welders, iron-benders and auto mechanics.
Seventy per cent of the site was swamp and the land had to be reclaimed, while the conglomerate invested approximately £300 million for 65 million cubic metres of sand filling, which elevated the height by 1.5 metres to insure against any potential impact of the increase in mean sea level due to global warming.
It said: “The project has tremendous benefits for Nigeria such as technology, employment, power generation, professional development, production of petrochemicals, increased demand for domestic crude, unhindered availability of the product, development of local areas and ancillary industries, as well as the availability of high-quality products. (EuroV grade).
“Our commitment is that we strive to make a difference in the social lives of host communities through investments that simultaneously provide lasting community benefits and direct business value.”
IPMAN’s views, caution
IPMAN Chairman of NNPC depot Ore, Western Zone of Nigeria, Shina Amao, expressed happiness with the expected commencement of operations by Dangote Refinery. He, however, cautioned that the refinery would not operate as a charity, but has a profit maximisation goal, as a commercial entity.
According to him, it is imperative for the Federal Government to make, at least, one of the refineries to be functional. He also called for the privatisation of the other non-performing refineries, adding that privatising them will ensure their rehabilitation by the buyers, who he said will manage them efficiently.
Amao said: “It is sad that a country that is the sixth producer of oil in the world and the biggest producer in Africa has no functional government refinery even with a population of over 200 million people.
Any time I remember it, I always feel bad because it affects the economy of every individual and company. If we know how much we spend on diesel and petrol, you will shout.
“The Dangote Refinery will soon be ready and if we have a functional national refinery, we will now work hand in hand to ensure that we meet our domestic fuel consumption.”
