Oil & Gas
Dangote Refinery’ll Transform Africa’s Economy -Stakeholders
The $12 billion Dangote refinery and petrochemicals complex has been tipped as having the potential to transform the African economy.
This was the verdict of oil and gas stakeholders at the just ended Ghana International Petroleum Conference (GhIPCON) in Accra, Ghana themed ‘Regional Collaboration; A Catalyst for Transformation’.
The conference was organised by the country’s Ministry of Energy and the National Petroleum Authority.
The stakeholders pointed out that with a wobbling Gross Domestic Product of $1.8 trillion, countries in Sub-Saharan Africa were on the cusp of economic transformation, with the imminent coming on-stream of Dangote refinery, particularly as the region is expected to be the direct beneficiary of the 650,000 barrels-per-day refinery, which will drastically reduce the countries’ fuel import majorly from Europe with expected impact on foreign exchange outflows.
The Sub-Saharan Africa presently boasts of over 132 trillion barrels of proven oil reserves, more than eight per cent of the world’s supply. Yet, it exports most of this oil to overseas refineries; which has for long denied the region of the huge opportunity for economic transformation.
The inability of African countries to locally refine its oil has taken a huge toll on their economies, with 48.5 per cent of the region’s population living below $1.25 per day and life expectancy hovering at 56 years.
Group Executive Director, Strategy, Capital Projects & Portfolio Development, Devakumar Edwin said at the conference that the refinery would soon come on stream to the benefit of the region whose economy had largely depended on imports from Europe and the west, and that the Dangote refinery will foster regional harmonisation in the distribution of cleaner petroleum products in West Africa.
Edwin, who was represented by the Technical Adviser to the President of Dangote Group on Refinery and Petrochemicals, Engr. Babajide Soyode, expressed belief that the completion of Dangote Refinery and other modular refineries projects across West Africa, would lead to the integration of the downstream industries, and stabilise the prices of petroleum products across the African sub-region.
He emphasised the need for other investors in West Africa to emulate the investment drive of Aliko Dangote in the downstream petroleum sector and make the sub-region an exporter of refined products.
Edwin also urged investors in Africa to take the bull by the horn by investing in the downstream sector.
“If Dangote can do it, any investor can do it. Dangote has not waited for government to regulate the downstream sector before starting the construction of the refinery. We don’t need foreign investors to turn around our downstream sector. African investors should be able to emulate Dangote and revive the African downstream petroleum industry,” he said.
He assured the stakeholders that the refinery is designed to process multiple grades of domestic and foreign crude, which can be converted into high-quality gasoline, diesel, kerosene, and aviation fuels that meet Euro V emissions specifications.
To bridge this gap and ensure cleaner fuel in the sub-region, Dangote Oil Refinery is being designed to accommodate multiple grades of domestic and foreign crude, and process them into high-quality petrol, diesel, kerosene, and aviation fuels that would meet Euro V emissions’ specifications, plus polypropylene. The facility, according to him, would be integrated with a petrochemical unit that will produce polypropylene and fertilisers.
Edwin said Nigeria would soon become the largest exporter of fertiliser in Africa as the Dangote Fertiliser Company is set to commence full production. According to him, pre-commissioning activities have started while construction work is still on-going at the Dangote Refinery site.
Speaking also, the Vice President of the Republic of Ghana, Dr. Mahamudu Bawumia, assured stakeholders in the petroleum downstream industry that the government would create an enabling environment for downstream business to thrive competitively, efficiently and with the highest of safety standards.
“Government, through the Ministry of Energy is in the process of ensuring institutional and regulatory re-alignment of the midstream gas subsector to bring clarity and a degree of certainty to players within that subsector.”
The GhIPCON is designed to actively bring to the fore the operating industry’s perspective and guidance on issues of governmental and regulatory policy, as well as best practices for the advancement of the industry across West Africa.
The conference witnessed a convergence of about 250 regulators and downstream industry stakeholders from across the West African sub-region and beyond.
On an earlier visit to the Dangote Refinery project, the President of Ghana, Nana Akufo-Addo, whose country has joined the league of oil producing nations, had said Africa could not wait any longer and that Ghana was specifically looking forward to the start of operation of the refinery.
Oando Plc has announced an increase of more than a half in turnover for 2021, according to its unaudited earnings report issued yesterday.
The increase helped the oil driller halt its two-year run of losses that began in 2019, the report showed.
Shares in the company had gained nearly 10 per cent, the upper daily limit allowed by the Nigerian Exchange, as of 10:14 WAT in Lagos after the news hit the market.
A messy shareholder dispute involving an indirect shareholder, Ansbury Investment Inc, had prompted the Securities and Exchange Commission to bar the firm from holding annual general meetings, making it impossible to release its financials for three years until last June.
At the heart of the conflict were loans granted to the shareholder, which forced Oando to make a huge impairment allowance that tipped the company into a loss after tax of N207.1 billion in 2019 and N140.7 billion in 2020.
Revenue for 2021 grew to N722.4 billion from N477.1 billion, while other operating income slowed to N36.7 billion from N43.6 billion as the company recorded a loss on fair value on commodity options in contrast to a gain one year earlier.
Oando earned N112.1 billion from reversal of impairment of financial assets, where a loss in the sum of N62.9 billion was posted a year ago, boosting operating profit.
Finance income expanded by almost fivefold to N44.1 billion, helping cushion the hit of net finance cost on profit.
Pre-tax profit stood at N48.4 billion compared to a loss before tax of N134.3 billion in 2020, while profit for the period came to N34.7 billion relative to a loss after tax of N140.7 billion one year prior.
Earnings-per-share was N3.04 compared to a loss per share of N9.05 in 2020.
“Bullish oil prices throughout the year saw us record a 105% increase in average realized oil sale price whilst a surge in militancy and sabotage across the Niger Delta resulted in a 40% decline in average hydrocarbon production compared to 2020,” said CEO Wale Tinubu.
“Despite the challenges, a strong revenue performance, coupled with the refund of a longstanding receivable contributed to a Net Profit of N34.7 billion,” he added.
Marketers and other groups in the downstream sector of the Nigerian petroleum industry have said that fuel prices in Nigeria may hit N750 per litre as the Nigerian government plans to remove petroleum subsidy.
The marketers made the disclosure at an online workshop titled; “Deregulation of the Nigerian Downstream Sector: The Day After”.
The workshop was organised by groups within the petroleum sector, in collaboration with the African Refiners and Distributors Association (ARDA).
The downstream actors, in conjunction with economic policy analysts and relevant government agencies, also outlined strategies and measures that should be deployed to ensure the sustainable removal of petrol subsidy.
In January, Nigeria’s Minister of Finance, Zainab Ahmed, said that it will be more appropriate for the government to begin the implementation of its fuel subsidy policy in the second quarter of the year.
The minister noted that the country needs to exit the fuel subsidy regime because it is a very significant contributory factor to revenue loss.
Speaking at the workshop, Chinedu Okoronkwo, the National President of the Independent Petroleum Marketer Association of Nigeria (IPMAN), represented by the association’s National Operations Controller, Mike Osatuyi, revealed that the marketers were in support of the government’s plan to embark on full deregulation of the downstream sector.
Mr Okoronkwo warned Nigerians to prepare to pay up to N750 for every litre of petrol after the full implementation of the subsidy removal.
He noted that the projected pump price was likely to drop to around N500 if the government encouraged the Central Bank of Nigeria (CBN) to provide foreign exchange for marketers at the official rate.
He urged the government to channel expected savings from subsidy removal to the provision of palliatives for the masses. He, however, advised the government to be alert and sensitive to resentment from Nigerians.
Also speaking, the National President of the Nigerian Association of Road Transport Owners (NARTO), Lawal Othman, said that the full deregulation of the downstream sector and complete removal of petrol subsidy would introduce a mix of opportunities and challenges into the operating environment.
In his goodwill message, Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, said the authority would allow a free market-pricing regime to prevail in the petroleum marketing business in the country once the sector was fully deregulated.
Taiwo Oyedele, the fiscal policy partner and Africa tax leader at PwC, urged the government and the regulators to identify potential pitfalls that could trigger resentment from citizens before, during, and after the removal of the petrol subsidy.
Mr Oyedele said deliberate public sensitisation, industry engagement, and collaboration with civil society organisations were needed to aid public buy-in during the implementation of full deregulation by the government.
He added that in the course of implementation of the policies, the government’s interpretation of its strategy must be issue-based and not confrontational.
Participants at the workshop included representatives of the African Refiners and Distributors Association (ARDA), Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), and Independent Petroleum Marketers Association of Nigeria (IPMAN).
Others were NNPC Retail Limited (NRL), Petroleum Retail Outlets Owners Association of Nigeria (PETROAN), Federal Competition and Consumer Protection Commission (FCCPC), PricewaterhouseCoopers (PwC), and CITAC Africa, among others.
The Nigerian National Petroleum Company Ltd., (NNPC Ltd.) says it has 1.805 billion litres of petrol in stock.
Its spokesman, Malam Garbadeen Muhammad, stated in Abuja on Monday that the volume of petrol in stock would last for 30 days.
He explained that 805.
35 million litres of the product were in depots nationwide, while one billion litres were still inside vessels.He added that in its efforts to ensure steady supply NNPC Ltd.
placed a robust plan for the supply of petrol from mid-February to March 2023.“An additional petrol supply of 884 million litres is also expected by Feb.
28.“For March 2023, a total of 2.
3 billion litres of petrol is expected, while about 2.5 billion litres, equivalent to 42 days sufficiency, will be the closing stock for the month,’’ Muhammad stated. (NAN)
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