As Nigeria considers reducing its reliance on imported refined Petroleum products, experts are debating its readiness to end fuel importation and the consequences for local refining capacity. They advise the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to stand firm and not give in to any pressures on this matter. Following the NMDPRA Chief Executive, Farouk Ahmed’s accusations that the Dangote Refinery was pressuring him to cease issuing fuel importation licenses, experts have shared their opinions on the matter. Ahmed refused the request to prevent a Monopoly and protect the nation’s energy security.
Several Nigerians disapproved of the regulator’s comment, leading to widespread demands for his dismissal. Energy consultant Henry Adigun criticised the NMDPRA for discussing the Dangote refinery with the media. He believed that Ahmed’s statements were mostly accurate, yet they were meant to be kept confidential. Adigun stated that the country should continue importing fuel until it has at least three to four fully operational refineries. He emphasised the importance of maintaining fuel imports until multiple refineries are operational.
National energy security and prices need stakeholder’s collective effort.
According to him, the chief executive of NMDPRA stressed the need for energy Security to be a collective responsibility rather than solely relying on one individual, questioning the appropriateness of the topic being discussed in the media. He also suggested that the government consider the impact on other midstream Investors who could be affected by the sudden stop in imports. Additionally, an expert emphasised that depot owners have the right to import fuel under the protections granted by the Petroleum Industry Act, stating that such a privilege cannot be revoked arbitrarily.
Adigun stated that those involved in fuel importation tend to favour the Dangote refinery for its competitive pricing over importing fuel from overseas. He further insisted that the rumour about the Dangote refinery lowering the pump price was unfounded and impossible to achieve. His stance was that regardless of whether the crude was sourced domestically or in naira, its cost would be determined based on the global standard. He revealed that the current landing cost of petrol is about #1,100, primarily attributed to production expenses.
NNPCL and Dangote were advised to negotiate a fixed selling price.
However, Adigun emphasised that for this to occur, there must be a mutual understanding between the Nigerian National Petroleum Company Limited (NNPCL) and Dangote to engage in selling at a set price, independent of international benchmarks and currency exchange fluctuations. On his part, Dr. Taiwo Ogunleye, a specialist in the energy sector, emphasised the continued significance of petroleum in both the world’s energy composition and the global economy. As a fundamental building block for the modern energy infrastructure, petroleum is key in moving the Global Economy forward.
He suggested that the NMDPRA enforce the backward integration policy outlined in Section 317(8) of the PIA to promote local Investment in refining within the downstream petroleum industry. Likewise, companies will be eligible to receive import licenses from the regulator under Section 317(9) of the PIA if they possess local refining licenses or can demonstrate a successful history of trading crude oil and petroleum products internationally to address product shortages. He argued that the regulator should retain control over those powers without interference. The specialist focuses on following NMDPRA guidelines when allocating import volumes.
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This includes considering factors such as refining output in the previous quarter, the number of active wholesale customers, competitive pricing, and a reliable track record in supply, storage, and distribution. According to him, all imported gasoline must meet the Afri-5 Specification (50 ppm sulfur) outlined in the Economic Community of West African States (ECOWAS) agreement on the African Fuels Roadmap or follow any regulatory requirements. Eche Idoko, the Publicity Secretary of the Crude Oil Refiners Association of Nigeria, emphasised the urgency for the government to stop importation without delay. Local refiners can meet the country’s fuel demand, provided that the government, as stated by Idoko, holds up its end of the bargain by supplying crude oil to local refineries in the local currency.