Page 5 - DMEA Week 09 2021

DMEA COMMENTARY DMEA

relieve Nigeria from fuel subsidies it’s Dangote. producer with near-zero refining capacity,” add-
He has the funding, the expertise, the contacts ing that while the Dangote unit will help address
and, as is quite apparent from the progress on this, there may be shortfalls during maintenance
his refinery, the desire to bring about meaningful or amid a growth in demand.
change.” “To support this, [a] licence to import any
With these benefits in mind, it is little surprise product shortfalls should be assigned only to
that the central bank has provided NGN100bn companies with active refining licences. Import
($26mn) of funding to the refinery and the Dan- volume to be allocated between participants
gote Group’s petrochemical and fertiliser plants. based on their respective production in the
However, this is pocket change for a project preceding quarter. Such import will be done
that has more than doubled in cost since plans under the [direct sale-direct purchase] scheme,”
were first drawn up. Having previously been he suggested.
quoted at $12bn, Emefiele said: “it may be close In support of this recommendation, Sulei-
to $15bn-16bn at this time” because of interest. man said that imported fuels are generally of a
He added: “When this project was contem- very low quality, noting that imported petroleum
plated, when it was still on the drawing board products must conform to the 50 ppm sulphur
about six years ago, before it started four years Afri-5 standard.
ago, it was meant to be about $7.5bn.” Given Nigeria’s miserable recent track record
in maintaining its refineries and following years
PIB of deal announcements that have brought no
Given the transformative potential of the Dan- change, not so long ago it would have been easy
gote project, the company has a unique opportu- to dismiss the Dangote project as another ambi-
nity to use its influence to bring improvements to tious dream. However, the company has suc-
Nigeria’s industry legislation. ceeded where many others have not, and while
This week, the company called for a clause the project is still to be completed and launched,
to be included in the long-awaited Petroleum its traction and influence have already brought
Industry Bill (PIB) that allows only companies excitement to a sector that have been in chronic
with an active refining licence to import petro- decay for decades.
leum products, arguing that this would encour- Meanwhile, anything it can do to ease Nige-
age private investment in the downstream sector. ria’s heavy reliance on fuel marketers will go a
In a presentation to members of the National long way to helping cure its Dutch disease. In
Assembly’s PIB joint committee, Dangote collaboration with the growth of modular refin-
Group’s chief strategy officer, Aliyu Suleiman, ing which has already begun to decentralise fuel
recommended a backward integration policy be availability and lessen the influence of market-
applied in the downstream sector to encourage ers, Abuja may have finally found a workable
investment in local refining. downstream model, though it remains to be
According to Nigeria’s Punch daily, he said: seen whether state involvement in the sector can
“Nigeria is exceptional in being a major oil become a force for good.™

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