Oil & Gas
NNPC to Licence Airline Operators for importation of Aviation Fuel
By Ubong Ukpong, Abuja
Group Managing Director of Nigerian National Petroleum Company (NNPC) Limited, Mr. Mele Kyari yesterday, said that the national oil company would licence Airline Operators Association of Nigeria (AOAN), to commence importation of Aviation Fuel otherwise called ATK.
Kyari disclosed this at the end of the investigative hearing into the price hike of ATK by oil marketers, held at the instance of the House of Representatives, during which the House leadership, Major Oil Marketers Association of Nigeria (MOMAN) and Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), NNPC Limited unanimously resolved to fix the ATK price at N500 per litre as against N670 per litre.
“We know this is a very difficult situation. We know that once aviation fuel increases, prices of flight ticket will certainly increase and this can surely cost pains for Nigerians. That is why we are working with you to ensure that those pains are minimized to the barest minimum and one of the elements is the pricing of aviation fuel.
“So, what we have engaged with MOMAN, DAPMAN and the airline operators is that in three days’ time, their representatives will sit down and agree on a transparent base for pricing. That means that they ought to have a referenced benchmark that is quoted transparently in the market.
“They will have a referenced exchange rate for the Naira so that anyone can compete. They will also agree on a premium which currently differs from Customer to Customer, depending on the volume you buy and the credit level.
“These are the things they can negotiate in three days and close so that going forward, there is a transparent decision on pricing. This will no doubt throw up the actual value of the product in the market. You will no longer see these discrepancies we have seen where some people are selling at 445 and some are selling at N630. This will completely bring close such that you will not see these differences.
“We also agreed that in the interim, between now and the three days that have to close negotiations, (the lowest price we have seen as at this morning was N445 and a high of N605. There is a trader that is selling at N630 and we don’t think this is normal and so, we discounted it), we agreed that the will sell at N500 in the next three days and after that, they will switch to the new price that everyone can assess.
Speaking earlier at the hearing, Deputy Speaker, Hon. Ahmed Wase chided the authorities of Nigerian Midstream and Downstream Regulatory Authority (NMDPRA) for failing in its responsibilities, saying: “You are suppose to regulate their (oil marketers) activities, are you just giving the licence? What are the minimum requirements; what is expected of that company that you are authorizing them to bring in this product; is it that they have the opportunity and then the leverage to tell you whatever rate they want and it has to stand? No, I don’t think so,” the Deputy Speaker queried.
While noting that the investigative hearing initiated by any Parliament is a quasi-court, Hon. Wase said: “you are a lea the one to give the direction. I cannot listen to them (Airline operators) much because you are the regulator, the law allows you to do that, the law allows you to issue licence, it’s not everybody that is allowed to bring in this product. GMD knows what suffering he has gone through in trying to bring back normalcy because of the carelessness of some persons has caused us. Is it the past situation we we have found ourselves that you are trying to take us back to? I said we are not, you remember I sued the word don’t blackmail this government? We are not willing to accept blackmail,” Hon. Wase warned.
In his remarks, Chairman/Managing Director of Air Peace, Mr. Allen Onyema who frowned at the fraud being perpetuated by the oil marketers and the reluctance to give actual cost of landing cost of ATK, said: “Mr. Deputy Speaker, sir, nobody on this side of the divide has answered your question. You have been asking them one particular question. Everybody is dancing around it.
“What the Deputy Speaker wanted to hear is how much did buy this fuel per liter. By now, you must have computed it. They are dancing around it and telling you stories. That is what you have been asking, sir. Before they came here, they were supposed to have computed their unit cost.
“I have the mandate of every airline in this country to announce to you that if they can’t come down from their rooftops, we have only three more days to be able to fly. We are not threatening this country. We have been subsiding what we have been doing.
“The rate as at today is N630, N640 and N605. We have an aircraft going to Kano, it has about 7000 liters of fuel in it, multiple it, sir by N630. The unit cost per seat is about N70,000 per seat. You have not talked about insurance that is very static. Nigerians pay heavy insurance premium because this country is stigmatized.
“You have to insure abroad. It is a must before all the insurance companies in Nigeria put together cannot even pay for one aircraft. So, you have to go abroad to insure. Yet the fuel cost which is supposed to be about 30 to 40 percent in every clime, in Nigeria it about 70 percent even before time. So, so you can now see the mortality rate of airlines in this country.
“They refused to answer your simple question. Whether you got money from CBN or red market, how much is the unit cost of your acquisition so that we know if the airlines are cheating you or you are cheating the airlines, if you have formed a cartel to increase your prices overnight. From what is happening, sir, if it continues this way, the least ticket will be about N120 for economy and we don’t want to do that.
“We want to inform the house that we are demanding that we should be given license to import this fuel. If we can buy jets that cost hundreds of billions of dollars, we can afford to import this fuel. Let NNPC give us the right to import this fuel, we won’t complain, sir.
Speaking after the resolution of the crisis, Mr. Onyema who applauded the House intervention, said: The Nigerian Legislature has been very wonderful, without you, the Airlines in Nigeria would have crumbed. I am not saying this to please you.
“You fought for the Customs waivers on imported aircrafts, Aircraft spares and for the airlines to have sustainable operations. So, we owe you a huge gratitude, together with the resident of this country who signed it into law.
“For the (NNPC) GMD, he was very transparent and was not on any side except on the side of truth. He told me it was too possible to bring down the price to N200, but he brought it to where it is. The DG NCAA has always breadth down our neck to ensure that fly safe. We thank the GMD for wading into this. Even though at N500, our unit cost per seat will now be about N85,000 barely insurance and other things. That is our pains. I wish we could buy this fuel at N200 so that Nigerians can afford to buy it. That is our predicament and so, the public should understand if there is shift in what they are paying now and what they are going to pay later.
“Anybody can calculate it just as it has been done here, to buy 8,000 liters of fuels at N500 per liter. How much will that give you for just one hour flight.”
On his part, the Deputy Minority Leader, Hon. Toby Okechukwu who frowned at the level of impunity being perpetuated by some actors, said: “I believe strongly that it is better to jaw aw than to war-war. Essentially, we all know the limitation of not getting a problem solved and the best always is to find solution which we have done today. We will continue to work for the Nigerians people.
“I will plead that whatever assistance the GMD and the regulatory authority can give the aviation industry, they should please do because the market is a big chaotic now and whatever impact in the aviation has security consequences.”
In his ruling, the Deputy Speaker, Hon. Wase who stressed the need for effective monitoring of the implementation of the resolution, said: “We have come to terms and reached a number of resolutions and we are looking forward to a conclusion.”
Oil & Gas
FG Inaugurates Committee to Enhance Gas Distribution in Urban Buildings
The Ministry of Petroleum Resources has inaugurated a Technical Working Group to enhance gas reticulation practices in Nigeria’s building industry.
The ministry’s Permanent Secretary, Amb. Nicholas Ella inaugurated the Technical Working Group (TWG) between the National Gas Expansion Programme (NGEP) and the Council of Registered Builders of Nigeria (CORBON) on Wednesday.
Reports= says that reticulation refers to the process of creating a network of pipes or tubes to distribute gas or other utilities to buildings or industrial sites.
The permanent secretary restated the importance of creating energy smart cities, saying that modern urban development relies on efficient gas and utility distribution systems,
“Most modern cities in developed countries have evolved to energy smart cities where energy, specifically gas and other utilities are piped to districts and estates.
“However, one of the key tools in creating energy smart city is the National Building
Code which, in essence, sets the guidelines on Building Pre-design, designs, construction and post-construction stages,” he said.
The permanent secretary reiterated the benefits of reticulated gas systems for households and businesses alike, adding that it ensured metered supply akin to water and electricity,
According to him, it eliminates the need for cumbersome refills, and also enhances safety by burying pipes and incorporating advanced safety equipments.
“The TWG is tasked with designing a comprehensive policy to implement best practices for gas reticulation using LPG, PNG, and Bio-Gas across Nigeria’s building sector.
“Key responsibilities include reviewing the current National Building Code, examining global gas distribution systems, and proposing quality standards for materials used in gas installations,” he said.
The permanent secretary emphasised the need for rigorous safety protocols and guidelines to ensure the efficient and safe use of gas in construction.
He urged the group to prioritise environmental sustainability in its recommendations, adding that the group is expected to submit its report by Nov. 15.
Earlier, Mr Samson Opaliwah, the Chairman of CORBON. expressed the council’s commitment to collaborate with the group to ensure safe uptake of gas for use in houses and housing estates in Nigeria.
“I assure you of the williness of CORBON to leverage the expertise and resources at her disposal to ensure that steps are put in place for gas infrastructure in buildings and estates.
“The gas infrastructure will be safe, sustainable and world-class.
” Our collective efforts will yield clear, standardised guidelines for safe and effective gas systems in buildings, matched with a skilled workforce to meet growing demands in Nigeria,” he said. (NAN)
Oil & Gas
Utilise Oil, Gas Industry Report as Tool for Public Debate – NEITI
The Nigeria Extractive Industries Transparency Initiative (NEITI) has urged stakeholders to utilise its 2022/2023 oil and gas report for civic engagement, constructive dialogue, and public debate.
Executive Secretary of NEITI, Dr Orji Ogbonnaya Orji, made the call at the report’s public presentation on Thursday in Abuja.
The report was unveiled by Mr Ola Olukoyede, Chairman, Economic and Financial Crimes Commission (EFCC), alongside Sen.
George Akume, Secretary to the Government of the Federation and Chairman, NSWG, NEITI and other dignitaries.Orji emphasised the report’s significance in guiding policy, encouraging public debate, and improving governance in natural resource management.
He highlighted the report’s comprehensive data on revenues, governance structures, operations, and compliance within the oil and gas sector.
Speaking at the public presentation of the report, Akume reaffirmed the Federal Government’s commitment to transparency principles.
Olukoyede pledged to investigate the report’s findings and recommendations, noting that NEITI’s previous reports led to the recovery of over N1 billion.
The report is available on NEITI’s website, providing valuable insights into the sector’s performance and challenges.
The presentation was attended by Chairmen of National Assembly Committees, captains of industries, members of diplomatic missions, development partners, civil society organisations and the media. (NAN)
Business Analysis
A Peep Into Dangote’s Refinery, The World’s Engineering Wonder
By Cletus Akwaya
Call it Dangote Republic and you would not be wrong, for that is what it means in real sense.
The ultra-modern Dangote Refinery and Petrochemical complex located at the Lekki Free Trade Zone in Lagos is the World’s Engineering wonder.
A guided tour for top Media executives in the country by the President, Dangote Industries Group himself, Alhaji Aliko Dangote on July 14, provided a rare privilege and opportunity to appreciate the project that has emerged as the World’s largest single train petroleum refinery.
Dangote, the Kano-born business mogul and Africa’s richest man, whose vision for the industrial transformation of Nigeria led to the initiation of this project is certainly a fulfilled person, having accomplished such a gargantuan task in the spelt of just about 10 years.
The refinery, which is built and equipped with the latest technology in the industry. It is a behemoth sitting on a huge land space of 2, 735 hectares, approximately seven times, the size of Victoria Island, the octane section of Lagos, which has become the abode for the very rich in the nation’s commercial nerve – centre over the decades.
The land was provided by the Lagos state government after the payment of $100million dollars by the Dangote Group as cost of the land.
The edifice didn’t come easy as the engineers had to reclaim 65million cubic metres of sand through dredging of the Atlantic coastline to pave way for the construction of the refinery and its accompanying facilities especially the Jetty.
The Dangote refinery is not a stand-alone project as it has a coterie of associated industries and infrastructure making it a self-reliant complex.
For instance, the company has a fully developed port (jetty)for maritime operations for both in-take of crude and discharge of refined products. This perfectly compliments the huge pipeline network that lands into the Atlantic for intake of crude and loading of refined products to ships. Its Jetty, which stretches 9KM into the international waters in the Atlantic Ocean and 12.5 KM from the refinery is perhaps one of the most modern in the world built with sand piles that shield the final landing points from the violent oceanic waves, thus providing for safety and stability of ships, barges and oil tankers.
The complex is accessed by 200KM network of concrete under-lay and well asphalted road network to ease vehicular traffic. The refinery has its dedicated steam and power generation system with standby units to adequately support operations of the various plants in the complex.
It has successfully completed a 435 MW power generating plant for its operations. The power generated from this plant surpasses the entire distribution capacity of Ibadan Electricity Distribution company, which supplies electricity to five states of the Federation including Oyo, Osun, Ondo, Ekiti and Kwara.
The Dangote refinery with a capacity of 650,000 bpd of crude oil is designed to handle the crude from many of the African countries, the Middle East and the US light crude. Its petrochemical plant is designed to produce 77 different high-performance grades of polypropylene, which is the major raw material for numerous industries and other refineries. With a huge refining capacity, Alhaji Dangote said the products from the refinery company would easily meet 100 per cent the needs of Nigeria’s demand for gasoline, diesel, Petrol and Aviation Jet with 56 per cent surplus for export, from which the company projects to earn a princely $25billion per annum from 2025.
The company has facility to load 2,900 trucks with its various products in a day by land and millions of litres of products through the waters depending on where the orders come from. The $25million projected revenue in 2025 could translate to a huge relieve for the nation in dire need of foreign earnings to shore-up the value of the nation’s currency.
The associated industry, the Dangote Fertilizers Limited also situated in the complex utilises the raw materials from petrochemicals to produce different varieties of fertilzers especially Urea, NPK and Amonia grades of fertilizers. Apart from the local market, Dangote is already exporting its fertilizers to other countries including Mexico, a testament to its high quality that meets world standards.
This feta, the President of Dangote industries explained was possible because of the high quality, the company has opted to pursue. In between the refinery and the fertilizers complex lies a 50,000 housing estate, which provided accommodation for the construction workers at the time of construction especially during the COVID-19 lockdowns of 2020, when workers remained encamped on the project site to continue with the work.
What stands out the Dangote Refinery is perhaps not in its sheer size and capacity but in the fact that it is perhaps the only of such projects whose Engineering, Procurement and construction(EPC) was done directly by the company without engaging the world renowned refinery constriction companies like Technip Bechtel (USA)Technip (France)Aker Solutions (Norway)Chiyoda Corporation (Japan)SNC-Lavalin Group (Canada)J. Ray McDermott (USA)JGC Corporation (Japan)Hyundai Heavy Industries (South Korea)Foster Wheeler (USA) and Daelim Industrial Company (South Korea)
“The design of the refinery was handled by dozens of Engineers and technical experts assembled in India and Houston, Texas, USA to execute engineering designs of the refinery,” said Edwin Kumar, the Executive vice President, Oil and Gas for the Dangote Group who midwifed the birth of the refinery complex.
“We didn’t give out contracts to anybody, we bought every single bolt and equipment ourselves and had it shipped into the country,” Dangote explained to his guests.
Part of the equipment imported into the country was the procurement of over 3,000 cranes to handle the evacuation of huge consignments of machinery from the wharf and for subsequent installation at the construction site. The cranes have become an unusual assemblage of such equipment to be found in one place on the African continent.
If there was any doubt that Alhaji Aliko Dangote is Africa’s richest man, the successful completion of the refinery and petrochemical complex at the cost of about $20billion has further confirmed his status as Africa’s leading businessman and entrepreneur.
However, Dangote does not really accept that he is the richest man on the continent,
“When you are rich, you accumulate cash, but when you wealthy, you create wealth” he told the top Media executives on tour of the huge project, explaining that he would rather prefer to be referred to as a “Wealthy man.”
And consistent with his business philosophy, Dangote hinted of plans to list the refinery on the Nation’s stock exchange by the first quarter of 2025. His vision is to avail the public of 20 per cent of the shares so as to ensure participation by Nigerians and even international portfolio investors.
The refinery company and the entire of Dangote Group at the moment provides direct employment to about 20,000 Nigerians and much indirect jobs to Nigerians, making it the highest employer of labour outside the government.
Most interestingly, the highly technical operations of Dangote refinery is operated by over 70 per cent of local manpower who work in the refinery control, centre, the numerous production and quality control laboratories among others. Some of the staff who explained their tasks to the visiting media executives said they were graduates of Engineering and allied disciplines recruited mostly from Nigerian universities and trained in various institutions abroad for periods ranging from sixth months – one year to master refinery operations. Through this strategy, Dangote has ensured transfer of technology to thousands of Nigerian youths.
“We don’t know where they come from as long as they are Nigerians and if they decide to leave and join international oil companies for better job opportunities, we have no problem with that,” Dangote responded to a question on the strategy to retain the technical manpower for stability of the refinery’s operations.
The Dangote Refinery is a Republic of some kind, at least an economic or industrial Republic.
But the man who presides over this ‘industrial empire’, Alhaji Dangote says his only ambition is to boot the nation’s economy and ensure netter life for Nigerians.
“When you import any product into Nigeria, you are importing poverty and exporting our jobs to those countries from where you are importing” Dangote said adding “this is why I want economic nationalism in Nigeria.”
Dangote’s vision even goes beyond Nigeria as he has cement factories and other business concerns in about 13 African countries including Ghana, Ethiopia, Tanzania, Uganda, etc. This signifies his continent-wide dream to transform Africa’s economies.
There has been attempts by some international oil companies to frustrate the successful take-off of the refinery, through over pricing and in some instances outright denial of crude supplies for processing. This made Dangote to commence importation of crude from the US. However, the cheering news that the Nigerian National Petroleum Company Limited (NNPC) has finally approved a supply arrangement has raised hopes that full operations will commence and that the long-awaited Dangote oil products will reach consumers around the country from August.
At last, the Dangote Group may have achieved its objective to serve as the elixir to Nigeria’s industrialisation effort. This is perhaps the greatest legacy of Africa’s richest man to his country of birth.