FG And Private Refineries Caught In A Web Of Mutual Deception

FG And Private Refineries Caught In A Web Of Mutual Deception

The recent developments in Nigeria’s oil and gas sector highlight a stark reality: the Federal Government (FG) and private refineries appear to be entangled in a cycle of mutual self-deception.

When Dangote Refinery announced its decision to discontinue fuel sales to marketers in naira, and the Nigerian National Petroleum Corporation Limited (NNPCL) simultaneously declared the end of the naira-for-crude arrangement, it became evident that the long-standing misconceptions held by Nigerians had been shattered by undeniable facts.…READ MORE….

Prior to establishing his refinery, Aliko Dangote reportedly consulted with key figures in the Buhari administration and the NNPCL, who assured him of an adequate crude supply to meet the refinery’s 650,000 barrels per day capacity. When former President Buhari commissioned the Dangote Refinery in May 2023, despite its lack of readiness for fuel production, he reiterated the government’s commitment to providing the necessary crude. However, this pledge has proven to be misleading.

In reality, Nigeria’s crude production capacity has consistently fallen short of expectations. Despite projections of achieving two million barrels per day (mbpd), the country has averaged just 1.4 mbpd over the past decade. Furthermore, the Organisation of Petroleum Exporting Countries (OPEC) has imposed a cap of 1.7 mbpd, making it impossible to meet both domestic and international demands.

The situation is exacerbated by past financial commitments made by the FG, including a $3 billion loan from Afrexim Bank, secured with future crude deliveries. Consequently, the NNPCL’s assurance of providing crude to domestic refineries, including Dangote’s, has proven unfeasible.

To compound matters, recent reports indicate that Nigeria may be forced to import crude oil worth approximately $1.4 billion monthly, further straining the country’s finances. The disparity between government promises and the harsh realities of production has left the nation dependent on imported fuel, contradicting the expectation of domestic sufficiency.

The ongoing crisis in Rivers State further complicates the situation. Political instability and security challenges in the region pose a significant threat to economic progress. If not effectively managed, the crisis could undermine efforts to stabilize the petroleum sector and impact the nation’s long-term economic outlook.

In summary, the FG’s promises of crude sufficiency for local refineries have proven to be illusions, with reality exposing the impracticality of these commitments. As the nation grapples with supply challenges and political uncertainties, stakeholders must confront the truth and seek sustainable solutions to secure Nigeria’s energy future.