Hope forlorn: Dangote Refinery and fight against illegal refineries

For quite some time now, no week passes without an arm of the armed forces and some agencies of the federal government announcing the number of illegal refineries that they have destroyed in the Niger Delta region. Just last week, the Nigerian Navy announced the destruction of seventeen illegal refining sites in 30 days, as part of its “efforts to sustain war against crude oil theft in the Niger Delta.” About the same time, the roll out of premium motor spirit (PMS) from Dangote Refineries that was to happen this month, was postponed for the umpteenth time.

Earlier in August, precisely on Wednesday August 13, the Nigerian army announced that it had destroyed at least 27 illicit oil refineries and “seized about 100,000 litres of stolen crude oil in a series of raids in the Niger Delta area.” In a statement, the army said its troops destroyed 23 illegal sites along the Imo River in Southeast Nigeria. Soldiers from the 16th brigade also said they neutralised four illegal refineries in the Degema area near Port Harcourt.

On its own part, the Nigerian National Petroleum Corporation Limited (NNPCL) said at end-June 2024 that 165 facilities illegally refining stolen crude oil were destroyed in the last week of the month alone. The chief executive officer, NNPCL, Mele Kyari said around 400 incidents of oil theft and vandalism were also reported by both government and private security agencies in the Niger Delta region during the one week period.

Unfortunately, while these exploits (destruction of illegal refineries) are being made, the spate of pipeline vandalism, mushrooming of illegal refineries and organised sabotage on oil installations remain on the increase. At the same time, the ever-present and nationwide scarcity of premium motor spirit (PMS, also known as petrol) has also become a feature of the country. In point of fact, there is already a covert relationship between the lingering acute scarcity of PMS and the proliferation of illicit refining sites in the Niger Delta region. The scarcer the commodity, the more the spate of illicit refining activities in the Niger Delta.

In all of this, the subsisting scarcity of the essential PMS and the consequential continuous rise in its pump price have inadvertently become an incentive for the operators of the illegal refineries. Put differently, the unaddressed acute shortage of petrol has created a ‘business opportunity’ for the economic saboteurs. Undoubtedly, the ‘booming’ illicit refineries could be the veritable source of the adulterated and substandard petrol and diesel that are practically flowing on the streets in various parts of Nigeria.

For various mundane and ridiculous reasons, the pump price of PMS has risen from below N200 per litre in May 2023 to close to N1000 per litre, against NNPCL’s pricing template. The prices are even much higher in the ‘black markets’ that have sprung up virtually everywhere in towns and cities across the country. Driven by the endless devaluation of the naira, the landing cost of imported fuel keeps rising on a daily basis. And apparently at its wits end on the shoddy PMS supply situation, the federal government has surreptitiously re-introduced subsidy on the commodity.

Reports indicate that President Bola Ahmed Tinubu, who is also the substantive minister of petroleum resources, has approved a request by the NNPCL to use its 2023 final dividends due to the federation to pay for petrol subsidy. In addition, the president also approved a halt on the payment of the 2024 interim dividends to the federation “to help boost NNPCL’s cash flow.” Details of the NNPCL’s finances show that total petrol subsidy expenses from August 2023 to December 2024 will amount to N6.884 trillion. And this will leave the company unable to remit N3.987 trillion in taxes and royalties to the federation account.

In the face of this insidious return of petrol subsidy, usually a cesspool of corruption and opacity, the federal government seems stranded on its never-ending repair/re-streaming of the existing state-owned refineries. Ad nauseam, there have been government promises and pronouncements on the repair, particularly, the Port Harcourt refinery. On countless occasions, either the minister of state for petroleum resources, Lokpobiri Heineken, or the chief executive officer of the NNPCL, Mele Kyari, has made seemingly definitive promises as to the exact date for the refinery to resume PMS production.

These prevarications and failed promises have since elevated the poverty of public confidence on the government and its policies. Recent government pronouncements on the Dangote Refinery were true to this pattern. At a time the refinery had commenced the production of diesel and Jet A1, the head of a major oil industry regulator elected to demarket and run down the company.

Specifically, in July 2024, the chief executive officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, announced that the Nigerian government was yet to licence the Dangote Refinery to begin operations in the country. According to Ahmed, the claims of efforts to scuttle the operations of Dangote Refinery due to lack of crude oil supply by international oil companies (IOCs) were not true, adding that the refinery was still “at pre-commissioning stage and has not been licensed yet.”

“Dangote Refinery is still in the pre-commissioning stage; it has not been licensed yet. We have not licensed them yet,” Ahmed said definitively. “I think they are at about 45 percent completion; so we cannot rely heavily on one refinery to feed the nation because Dangote is requesting that we should suspend or stop all importation of petroleum products and direct all marketers to the refinery.”

Howbeit, it is a reality that the Dangote Refinery was officially commissioned mid-May 2023 by the erstwhile President Muhammadu Buhari; and Farouk Ahmed was speaking about a year after that event. However, a few weeks after the NMDPRA boss’ disinformation, the federal government opted to wade into the maze of propaganda and clash of stakeholder interests. As it were, some of the stakeholders want to maintain the status quo, and keep importing refined petroleum products; and would deploy all schemes to stop the Dangote Refinery.

President Bola Ahmed Tinubu waded into the seeming imbroglio, acknowledged the readiness of the Dangote Refinery to commence PMS production, and gave approval for the NNPCL to sell crude oil in naira to the refinery and all other local ones. Even with this presidential order, intrigues by a multiplicity of interest groups in the oil industry have practically forced the Dangote Refinery to again push forward its earlier PMS roll out month of August.

For Nigerians, who bear the brunt of the lingering PMS scarcity and rising prices of the commodity, the contrived delay of Dangote Refinery is a conspiracy against the people. Not a few Nigerians see the roll out of PMS from the Dangote Refinery as a game changer in terms of the availability and affordability of the product. But the realisation of the hope has remained forlorn, even with Presidential interventions.

Addicts of the rentier economy that Nigeria has become will stop at nothing in ensuring that they keep prospering even as parasites on the nation’s patrimony. That is why the proliferation of illicit refineries will go on; PMS importation must be sustained and building of local refineries must be frustrated with glee. In all of these, who is the real saboteur of the Nigerian economy? Your guess is as good as mine!

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