Dangote Refinery may lead to the sale of NNPC refineries in the long run

Dangote Group’s, President and Chief Executive Officer, Aliko Dangote while speaking at the Nigerian National Petroleum Corporation (NNPC) headquarters; have said that 53% of Dangote refinery’s capacity upon its completion will be dedicated to petrol production.

Dangote refinery will have a refining capacity of 650,000 barrels per day; dedicating 53% of this capacity to petrol production simply amounts to 344,500 barrels of petrol per day.

This is indeed a welcomed news as the consolidated capacity of NNPC’s four refineries; according to the corporation’s latest operations report is only but 445,000 barrels per day. Yet for several years now the four refineries have hardly delivered up to half of their consolidated capacity in terms of crude oil refining.

These four refineries are Warri Refining and Petrochemical Company, two plants at Port Harcourt Refining Company and Kaduna Refining and Petrochemical Company.

Dangote Group may soon dominate the Petroleum industry

Although, Aliko Dangote have stressed that Dangote Group is no way in competition with the NNPC refineries; it is certainly obvious that if they were, they would have knocked them off the leader board. To further buttress this fact, recent news reports reveal that NNPC have made no profit from its refineries since May 2018; rather the corporation have recorded consecutive losses since May 2018 till May this year (2019).

However, Dangote have said that the business approach of the Dangote Refinery is; relating with NNPC as a collaborator rather than a competitor. He also added that the refinery would rely heavily on NNPC’s knowledge of the refining business in Nigeria to achieve its central objective; which is in alignment with the Federal Government’s aspiration to ensure adequate in-country refining capacity.

In Aliko Dangote own words;

“The most important thing for us is to see how we can partner with the NNPC; it is not to see how we can compete with the NNPC. We would like the NNPC to be part of us and we also want to be part of the NNPC. I think that is the only way we can achieve a win-win situation.”

Though NNPC may now appear as collaborators, it is worth noting that the success of Dangote refinery may in the long run result in the sale of its refineries (NNPC refineries) if they continue to run at loss. The Dangote Group is known for its ability to most times disrupt and dominate any sector they venture into. Remember how they took over the salt business (NASCON) from the Federal government.

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In response to Aliko Dangote, the NNPC’s Group Managing Director, Mele Kyari; said the national oil firm was also not in contest for market share with the forthcoming Dangote Refinery. They are rather providing support to the promoters of the project to boost in-country refining capacity.

A call for more refineries

Kyari also said, as the chief enabler of the Nigerian economy, NNPC have a duty to rally industry players like Dangote Group to achieve the target of making Nigeria a net exporter of petroleum products. He also assured others who would love to be promoters of refineries of getting the same level of support as the ultimate aim is to enhance in-country production to the point of self-sufficiency and ultimately for export.

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