The negative attitude of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) towards the Dangote Petroleum Refinery has spread as a shock wave across the country.
Apparently advocating for the foreign exchange-draining and crushing pump prices of the Premium Motor Spirit (PMS), these two government agencies embarked on a campaign that reduces all the gigantic efforts that went into the construction of one of the world’s largest oil refineries in the world to a mere joke.
The NMDPRA’s Chief Executive, Farouk Ahmed alleged that the diesel that flowed from the refinery in Lagos was inferior to imported ones, and stressed that the refinery had yet to be licenced to sell petroleum products. On his own part, the Chief Executive Officer of NUPRC, Gbenga Komolafe took the side of the International Oil Companies (IOCs) who deny Dangote access to much of the crude oil extracted from Nigerian oil fields, on the grounds that “the Petroleum Industry Act (PIA) has a stipulation that calls for a willing buyer-willing seller relationship.”
These organisations play crucial roles in the oil and gas sector. The NMDPRA, as a regulator in the midstream sector is the final arbiter on issues like safety standards, environmental protection, pricing, and market competition, and takes a critical look at activities such as pipeline transportation, storage, and processing facilities. These are essential for a well-functioning energy sector. On its part, the NUPRC is the regulatory authority responsible for overseeing activities in the upstream petroleum sector, including exploration, production, and development of oil and gas resources, so it interfaces with the IOCs in Nigeria. It is involved in the licencing, monitoring, and enforcement of regulations of operators to ensure compliance with industry standards, safety protocols, and environmental regulations. If agencies with these crucial responsibilities raise their swords against an indigenous refinery, it shows the attacks are institutional, and must be resisted by all Nigerians.
This newspaper is by no means suggesting that regulators should compromise standards for any individual player or group of players. However, Daily Trust is interpreting the euphoria across the length and breadth of Nigeria over an impending refining of petroleum products from Dangote as anchored, not on the kind of perfection that the regulatory agencies have invoked. Rather, Dangote’s efforts are seen as a glimmer of hope for an environment where, for almost two decades, and with billions of Naira funneled into Turn-Around-Maintenance (TAM), the Nigerian National Petroleum Corporation (NNPC), as it were, failed to refine petroleum from its four refineries.
Four refineries in Port Harcourt, Warri and Kaduna had been established for the purpose of refining our crude oil and pipelines spanning thousands of kilometres buried underground to convey finished products to petroleum depots at strategic locations in Nigeria for distribution to petrol stations. The multi-billion-dollar investments have been reduced to a huge waste. The groundswell of feelings among Nigerians is that these huge investments have failed because top public servants prefer the sustained focus on importation of refined petroleum products, for reasons best known to them.
Of all the major oil producing countries in the world, Nigeria is one that imports refined products, instead of refining its highly valued Bonny Crude oil. Crude oil-endowed countries like Saudi Arabia, Qatar, Russia, Libya, and Iran make use of locally-refined petroleum products, distributed to their citizens at affordable prices. In Nigeria, the population is subjected to the harsh pump prices of imported refined products.
It is in the interest of Nigeria for our oil and gas institutions to support Dangote and his likes to succeed in their quest to produce goods at industrial scale. Developed countries support their own local manufacturing sectors, no matter how imperfect they may be when compared with foreign companies. This attitude runs through countries like the United States, China, Japan, India, Germany, Russia, South Africa, Brazil, Vietnam and even South Korea. A recent example was the Chinese unconditional support for Huawei and Alibaba who faced adversity from developed countries. This is the way Nigeria must go.
Nigerians would have been more excited if NUPRC, for instance, had brought an end to the theft of Nigeria’s crude oil by effectively activating its monitoring and preventive measures in order to meet the Organisation of Petroleum Exporting Countries’ (OPEC) export quota for Nigeria.
The attitude of these regulators towards Dangote provides an idea of how many smaller local investors may have been frustrated by top public servants, whose actions and inaction crush local initiatives rather than encourage them. No wonder, the government, for over a decade now, issued more than 23 licences to local companies to refine petroleum products, but none, except Dangote, has ventured into this difficult terrain. This bad culture does not only frustrate local investors, but it sends the signal to foreign investors that local laws are implemented in ways that are inimical to the survival of investments in Nigeria.
It is good that the Minister of State for Petroleum Resources, Heineken Lokpobiri, has intervened in the matter. But most importantly, we call on the oil and gas regulators to halt the gang-up against the Dangote Refinery and other local manufacturers who put their resources at stake to boost the country’s industrialisation.