Dangote Refinery Warns: Petrol Exports Likely If Marketers Boycott Supply

The Dangote Refinery has issued a warning that petrol may be exported if local marketers choose to boycott the product. Discover the potential impact on the domestic fuel supply and market dynamics.

The Dangote Petroleum Refinery has announced that it will export its Premium Motor Spirit, commonly known as petrol, if the Nigerian National Petroleum Company Limited and other local petroleum vendors decline to purchase it.

On Monday’s airing of the Brekete Family live show, Devakumar Edwin – Dangote Industries Limited’s Vice President in charge of Oil and Gas – declared this statement.

The production of petrol has commenced at the refinery, leading to local oil traders bringing in diesel and aviation fuel, causing hindrance in the sales of Dangote’s fuel.

“Our exports have included aviation fuel, kerosene and diesel. However, we recently commenced the production of PMS which marked the last stage before petrochemicals.”

“He confirmed that as of yesterday (Sunday), we commenced the production of PMS from our refinery, which is great news for the nation.”

When asked about selling the petrol locally, Edwin responded by highlighting a blockade that has prevented them from lifting their products within the country. Due to traders imposing hindrances, they have resorted to exporting petroleum products instead. However, he assures readiness in providing as much PMS as possible for pumping into the country presently.

He declared that if the traders or NNPC do not purchase the product, it is evident that exporting PMS like aviation jet and diesel will be our fate.

Edwin was surprised to see the company encountering unforeseen challenges once the refinery began operating.

He remembered that the original philosophy was to enhance the worth of indigenous resources in Nigeria, but felt remorseful that after more than thirty years, Nigeria still exports natural crude and imports processed petroleum products.

The guiding principle is to refine the crude rather than exporting it, thereby increasing its value and enabling us to export finished products while also meeting local demand. Regrettably, we have encountered difficulties with our supply of crude.

He added that the current situation involves struggling to obtain crude, resulting in a shift of philosophy such as importing from various countries including the US and Brazil. It is quite different than previous decades, where crude was exported rather than products being imported.

“He further stated that the ongoing situation still persists. Our crude allocation is insufficient and it’s being exported instead of utilizing it for our own needs, thus we have no choice but to import from external sources. Although some local procurement exists, its insufficiency remains a concern.”

He commented on the regulations that mandate fulfilling domestic demand before exporting crude oil, stating that according to the Petroleum Industry Act, no exports may take place without first satisfying local refineries’ needs. However, procuring enough crude has proven challenging.

Due to insufficient local supply, he disclosed that the company has initiated the erection of four crude tanks with a capacity of 120 million litres each for storing imported crude.

He stated that four new crude tanks are being built at the refinery, each with a capacity of 120 million litres. This is necessary as they are unable to obtain local crude and must import from overseas, which requires them to have sufficient stock due to shipping times.

Insufficient support from the community in the vicinity.

Although the refinery’s gantry can accommodate 2,900 tankers daily, Edwin revealed that it has only utilized up to 5% of its capacity due to insufficient local demand.

Visit our product gantry, which has the capacity to accommodate 86 tankers simultaneously. Although we have the ability to load up to 2,900 petroleum tanker trucks per day, a meager five percent of that capability is currently being utilized due in part to interest groups within the trading community who perceive local production as potentially detrimental and therefore prevent its sale locally.

Our products won’t be lifted, so we have to resort to exporting them.

He questioned whether simply surviving by importing crude and exporting petroleum products was the motive behind his investment in the refinery.

According to Edwin, the refinery’s laboratory sets a benchmark in fuel quality assessment. He confidently remarked that no other refinery can lay claim to having more advanced equipment than theirs.

He stated that the Euro 5 grade has been implemented by the petroleum refinery, citing it as a standard acceptable in both Europe and the US.

We have the capability to export our top-of-the-line product worldwide, boasting unparalleled quality with minimal sulphur content. Not only that, but we also maintain a zero pollution status which ensures that our products are of superior grade. It is exactly how we’ve built a foundation for successful exports thus far.

He added that the refinery had been launched successfully and is producing products, with our aviation jet fuel being sent to Europe while we export our diesel.

According to the Dangote CEO, a guiding principle of their company is ensuring exceptional environmental sustainability in all locations where they operate.

Additionally, when we visit businesses, our primary focus is on the production costs and energy efficiency. This same approach has been implemented here as well. Consequently, upon commencing production, it was discovered that the energy expenses are minimal.

“Dangote is not a monopolist.”

Expressing concern, the vice president noted that allegations of monopolistic practices against Aliko Dangote, President of the Dangote Group, were still being made. The founder’s intention was to generate economic growth and employment opportunities without compromising profits.

He revealed that the profits generated by Dangote are being plowed back into the nation, initiating further prosperity and contributing to the Gross Domestic Product.

“We invest our profits and borrow to make investments, following the lead of Alhaji Aliko who has been investing in businesses using this strategy.”

Despite our profits, it’s unclear where the money is being spent. It isn’t funneled into offshore accounts in Dubai or Switzerland and no properties have been purchased recently. When I first started working with Alhaji Aliko back in 1991, he owned homes both in the US and UK; however, everything has since sold off leaving him to reside solely at his thirty-five-year-old residence today.

According to him, despite focusing on manufacturing, job creation and generating wealth within the country, he has not expanded his real estate portfolio. Nevertheless, people still accuse him of being a monopolist.

Our correspondent was informed by industry sources on Sunday that the Dangote PMS will be available in the market shortly.

Our correspondent was informed by undisclosed sources that the government and Dangote Group are collaborating on arrangements for distributing the product.

An insider from the government suggested that negotiations with the Federal Government are underway to resolve issues concerning the sale and distribution of PMS.