Majeed Dahiru: Govt should explain to Nigerians the ‘forced marriage of inconvenience’ between Dangote Refinery and NNPC

Nigerian columnist Majeed Dahiru has said the Nigerian government should properly explain to the citizens of the country the reason behind what he described as the “forced marriage of inconvenience” between the Nigerian National Petroleum Company Limited (NNPC) and the Dangote Refinery.

The columnist said this in an interview with ARISE NEWS on Friday while discussing the ongoing petrol price dispute between NNPC and Dangote Refinery, where he said he saw no point in the collaboration as it did not bring any benefits to Nigerians.

Dahiru, criticising the lack of transparency in the government, said: “Until we have an alternative to petrol, what I want to say is that the energy product that we are using today has to have a component of availability as well as affordability. And affordability entails government intervention in pricing, as is happening all over the world. Whatever energy mix you decide to use anywhere in the world, it has to have government intervention in pricing. This is something that we have been running away from for so long and it has caused us a lot of trouble. But this government has decided to liberalise it and I say that they owe it to the public to give a clear explanation of this arrangement with Dangote and NNPC, which is clearly not working well. There is so much bitterness. It seems that Dangote sees NNPC as an enemy and not a friend. And that is why we have to understand why we have this forced marriage of inconveniences in the first place, which is going to lead to a shortage of petroleum products.”

Dahiru questioned the rationale behind NNPC being the sole buyer for the Dangote refinery instead of allowing a market system, as he said: “With the Dangote refinery coming online, one would think that it would be a willing buyer/willing seller between the promoters of the refinery and the sellers in Nigeria, which includes the NNPC trade. But interestingly, an arrangement was actually proposed whereby NNPC would be the sole buyer for the Dangote refinery.

“It is very interesting because I do not know of any benefit that this would bring to Nigerians. And from the disclosure of the pricing template by NNPC, it is clear that Nigerians are buying this petroleum product that is being supplied from the Dangote refinery as a premium because not only have we seen the price increase, but we also see a mark-up in the pricing template which suggests that it is probably not a subsidised product. So the question now is why this marriage of convenience between NNPC and the Dangote refinery which seems to be beneficial to the promoters of the Dangote refinery.”

Dahiru also highlighted concerns about the availability of petrol, citing reports of a recent supply shortage. He warned that Nigerians could soon face both unaffordable prices and a lack of fuel availability.

He said: “Apart from the pricing issues and the price fluctuations, there is also the much-discussed issue of availability. So, apart from the price dispute, there is also the dispute of availability on the supply side. While Dangote disputed the price that NNPC presented, he did not present his own price. I mean, someone bought products from you, if you are saying that the price that the buyer has made public is the cost of the products, then you should immediately inform the public what the cost of your product is, at what cost you sold it to the buyer.

“We now have a bigger problem of supply consistency – according to reports in major Nigerian newspapers, it is suggested that instead of receiving 25 million litres per day as agreed in the agreement between the NNPC and Dangote Refinery, there seems to have been a shortage in the last 3 days, almost 5 million litres on the supply side. So all these problems are worrying because they mean that Nigerians are now facing unprofitability of the product and imminent unavailability because if the shortage continues in the coming days, we are likely to see the queues return and they will be longer and more painful because of the unprofitability component of the whole problem.

“That is why I find the government’s inconsistency in not allowing Dangote to sell to willing buyers, which is the highest degree of a willing seller, to begin with, also puzzling.”

While Dahiru acknowledged the importance of transitioning to more sustainable energy sources, he stressed that the government has not developed the capacity for such a transformation, saying: “The reality is that as of today, the government has not developed that capacity. It is not consumers like us or citizens like us who have that responsibility to develop such capacities as alternatives to petrol or hydrocarbon-based energy.”

He further stressed the need to keep petrol prices within the affordable threshold, given the economic realities of Nigeria, saying: “We should stick to what is within the affordable threshold. Nigeria is a country where the minimum wage is N30,000 per month and the price of crude oil is N1,000. Given the importance of petrol in driving our economy, in driving the logistics of our economy, this is well beyond the affordable threshold, but that is a different ball game altogether. I am saying that a government that has supposedly removed subsidies and is determined to liberalise the system should not do that, otherwise it should make it clear that the basis of the relationship between Dangote and NNPC is the purpose of the subsidy. Then we can start to examine whether the subsidy is useful at this juncture or not.”

Ozioma Samuel-Ugwuezi