Dangote Refinery: Lastly, a Resolution Nigeria Can’t Import!

By Abiodun Alade

If there’s one burning query on the minds of Nigerians nowadays, it’s this: why are we paying between N1,000 and N1,500 for a litre of Premium Motor Spirit (PMS)?

Sadly, the very individuals who must be explaining this unusual new actuality have determined to remain tight-lipped with heads buried within the sand like ostriches. In the meantime, those that have been milking the nation’s oil wealth whereas protecting its 4 refineries comatose – have been busy peddling lots of doubtful narratives to discredit Dangote Petroleum Refinery. Apparently, some folks would moderately pull the wool over our eyes than allow us to see the actual image.

Let’s get one factor straight: the Dangote Refinery is to not blame for the value of PMS in Nigeria. In truth, with out this refinery, we may be watching petrol costs as excessive as N2,500 a litre – similar to the latest strident gloomy predictions from oil entrepreneurs and analysts.

The actual culprits on this worth mess are the oil cabals and their cosy buddies on the Nigerian Nationwide Petroleum Company Restricted (NNPCL). These people are busy making an attempt to spin the story that domestically refined merchandise are by some means dearer than imported gasoline, which, of their view, justifies the continued have to import gasoline and maintain these extremely subsidised costs intact. Let’s pause for a second and ask: since when did importing gasoline turn out to be a greater deal than refining it domestically? That’s like paying further for a loaf of bread as a result of another person baked it of their oven… miles away.

As with all world refineries, the Dangote Petroleum Refinery doesn’t set pump costs for petroleum merchandise. These selections, a lot to the chagrin of the refinery’s critics, are based mostly on market dynamics, authorities insurance policies, and, the affect of some very highly effective people. The actual cause for the latest hike in petrol costs is a straightforward equation: subsidy removing plus the floating of the Naira.

As just lately as August, stories confirmed that the NNPCL was promoting petrol at half the precise value of imported gasoline. Formally, the pump worth was N568 per litre, however the true touchdown value was a stunning N1,100 per litre. So, the NNPC was generously “subsidising” gasoline imports by nearly N600 per litre – subsidising, that’s, till the complete scheme grew to become too costly to maintain. So, naturally, costs have been hiked to N855 per litre.

And right here’s the kicker: the Federal Authorities racked up an eye-watering N5.1 trillion in under-recovery and power safety bills on gasoline imports in 2023. Guess the place that cash got here from? The identical pockets that ought to have been stuffed with healthcare, schooling, and infrastructure funds. As an alternative, we have been left with an empty pockets and a invoice that was too massive to disregard.

In the meantime, on the opposite aspect of the world, Guyana – the third-smallest sovereign state on the earth, is generously handing out $100,000 money grants to its grownup residents as a part of its oil increase, whereas Nigeria – essentially the most populous black nation on Earth – is amassing international debt to pay for gasoline subsidies.

If the pricing template used to offset imported petrol prices was utilized to merchandise from Dangote Refinery, the value of petrol could possibly be a lot decrease than what we’re seeing at this time – presumably as little as N500 per litre. That’s proper, N500. However after all, the federal government, apparently has determined to not restore the subsidies. In any case, what was as soon as supposed as aid for the folks has now became a siphoning operation.

In keeping with a report by The Guardian Newspapers in October, oil entrepreneurs are making an additional 48% revenue by smuggling petrol out of Nigeria to neighbouring nations, the place the value is way larger. In Mali, the value is N2,266 per litre, in Cote d’Ivoire it’s N2,289, in Cameroon N2,196, and in Benin Republic N1,779. No surprises there, then, that every day PMS consumption in Nigeria retains rising. And if the oil cabals get their manner, we’ll be a whopping 103 million litres per day – similar to we noticed in 2022.

The federal government is, understandably, making an attempt to maintain native costs aligned with these in neighbouring nations to curb smuggling. However truthfully, till the grasping cabals are proven the pink card and we lastly declare that “enterprise as ordinary” is over, the federal government technique is useless on arrival.

Whereas President Bola Ahmed Tinubu’s Naira-for-Crude initiative is definitely a step in the fitting path, the floating of the Naira continues to be protecting petrol costs stubbornly excessive. Why? Crude oil is priced in {dollars}, so home refiners, together with the Dangote Refinery, are nonetheless paying the precise greenback quantity for crude, however now in Naira. And whenever you convert greenback to Naira, it’s costly. As an example, a mere $90 per barrel now interprets to over N150,000.

Presently, a litre of Nigerian crude prices between N890 and N910, earlier than factoring in refining and logistics prices. So, what’s the magic quantity? How a lot can a refinery – home or international – realistically promote a litre of refined petrol for? That’s the million-naira query!

With the Naira-for-Crude coverage, the expectation is that the Naira will stabilise over time. If that occurs, petrol costs ought to ultimately fall. Think about, if the Naira strengthens to N1,000 to the greenback – the value of petrol might drop considerably. That’s what each real, patriotic Nigerian must be rooting for – not chasing after legendary {dollars} that solely serve to place extra strain on the Naira.

The Minister of Finance and Coordinating Minister of the Economic system, Wale Edun, proudly said that the federal government would earn about N700 billion month-to-month from the sale of crude in Naira and from the subsidy removing insurance policies, in comparison with the $600 million it was beforehand spending on gasoline imports. So, let’s do the mathematics: one choice helps the folks, the opposite helps the oil cartels. No prizes for guessing which one advantages Nigeria in the long term.

After all, the oil cabals gained’t see the advantages as a result of it should take away their free entry to wealth, permitting them to proceed dwelling their greatest lives. Isn’t it humorous that these similar entrepreneurs who’ve been crying about petrol costs due to an absence of native refining capability are actually saying it’s cheaper to import gasoline than to refine it right here? The place have been they when the federal government was doling out trillions for the turnaround upkeep of refineries? Out of the blue, the touchdown value of imports, which was as excessive as N1,400 per litre, has magically dropped to beneath N1,000. How handy!

It’s clear that the cartels have been mixing off-spec gasoline whereas gathering subsidies for “premium” merchandise. Or maybe they’ve been stealing crude and mixing it overseas – in spite of everything, crude theft in Nigeria is a widely known enterprise, particularly when it’s finished utilizing massive vessels beneath the radar.

Already, Nigerians are seeing the advantages of the Dangote Petroleum Refinery in lowering the costs of different petroleum merchandise like diesel and aviation gasoline by over 45% and 35% respectively. Naturally, this earned Dangote a good bit of flak from the oil cabals, who promptly wrote to President Tinubu, complaining that this “patriotic man” was ruining their enterprise by assuaging the struggling of the folks. Whoever knew that doing one thing good for the general public could possibly be so controversial?

Nonetheless, we’re assured {that a} related discount in PMS costs will observe as soon as native refining capability is totally embraced and stakeholders begin placing Nigeria’s pursuits forward of their very own pockets. In any case, if it really works for diesel and aviation gasoline, absolutely it’s not an excessive amount of to ask that petrol costs observe go well with – until, after all, the oil cartels have a unique agenda.

The Dangote Petroleum Refinery has chosen to rise above the noise, urging all stakeholders to place the nation’s progress and the welfare of its folks above private beneficial properties. Sadly, some choose to maintain spreading falsehoods a couple of personal funding that’s designed to propel Nigeria in the direction of financial self-sufficiency.

For these nonetheless sceptical, I’ll say this: the Aliko Dangote I do know shouldn’t be the sort to bow to propaganda, hate, or lies – particularly when it’s all in defence of Nigeria’s nationwide curiosity and the event of Africa.

Abiodun writes from Lagos