PIB: Why Shell’s Confession Shocking…..Dangote to become sole crude oil exporter

Dutch oil giant, Shell Petroleum Development Company Of Nigeria Limited, has taken a deep retrospection and given itself knocks for unsustainable oil exploration in parts of the globe and particularly the Niger Delta as it has apologized for years of environmental degradation and neglect of host communities. Alongside this development is the raging issue in the country over the now very controversial Petroleum Industry Bill, PIB, which is related to oil-related activities in the nation.

Shell’s international operations have been engaged in various reforms, including taking on sustainable productions aimed at saving the ‘environment’ and by extension the peoples where its operations flourished.

In a large gathering of stakeholders in The Hague, Netherlands, recently, Shell further announced that it is exploring its new “I am Sorry Campaign” in a new dawn as it would be leveraging the power of truth and reconciliation to put the past behind and building a sustainable future in South Africa and other parts like the Niger Delta where its operations have been a subject of fierce criticism over all forms of abuses. 

Indeed, Shell announced that its new leadership would put up a comprehensive plan of action for the Niger Delta towards correcting all the imbalances it had perpetrated over the years.

While announcing that it was sorry for making the land uncultivable, the fishes in the inedible waters and air toxic through oil leakages and gas flaring, Shell promised that come May 18, it would host all stakeholders in The Hague where all these packages would be unbundled.

However, while there is a ray of hope from international giant Shell that it is ready to ameliorate the conditions of its host communities where it operates, the current leadership of the National Assembly and the executive are yet to come to terms with the passage of the Petroleum Industry Bill, PIB.

With Shells position, many stakeholders have been commenting that it was not believable and that they were shocked that Shell could make such confessions in the face of its long drawn unpreparedness to take any meaningful remediation measures that would assuage the agitations of the Niger Delta communities that have been at the receiving end of their unending devastation of their environmental. 

However, it was exclusively reveals the rot in the petroleum sector and the behind the scene manipulations of the leadership of the National Assembly to include a clause in the PIB that will make Aliko Dangote, the sole exporter of Crude oil in Nigeria.

Indeed, revelations from the  National Assembly has unearthed years of fraud in the oil and gas industry as a lawmaker in the Oil and Gas Committee , House of Representatives who doesn’t want his name mentioned disclosed to that revenue from the Gas explorations in Nigeria has not been accounted for” In the course of the hearing on the PIB Bill, we have discovered that revenue from Gas has not been accounted for , what this means is that the players in the industry have devise a means of diverting this money”.

Continued, he said “The focus has always been on crude oil and the 13 percent derivations from the crude oil, but after our interactions with the host communities we are now asking what about the derivations from Gas which is another component of the crude oil?”

It was reliably gathered that a meeting with the stakeholders with the House Committee on Oil and Gas , penultimate week was abruptly brought to an end when the corruption in the Gas sector was mentioned by a representative of the host Communities.

The Hon. Nicholas Mutu Committee on Gas had invited the Minister of State on Petroleum, Timi priye Sylvia and other stakeholders which ended up less than 30 minutes following the agitations from the host Communities.

To douse the tension, Hon. Mutu told the stakeholder “ There have not been any record on Gas, that is why we are inviting all the relevant stakeholders to make input so that it will be included in the PIB” He was quoted to have told the gathering. But this could not be independently clarified as several visits to his office to interview him on the controversial revenue from Gas did not yield fruit.

Documents exclusively obtained by AljazirahNigeria show that Federation Crude oil and Gas lifting are broadly classified into equity Export and Domestic; both categories are lifted and marketed by the NNPC and proceeds remitted into the Federation Account.

“Equity Export receipts are adjusted for Joint Venture (JV) cash calls are paid directly into the Federation Account domiciled in the CBN. Domestic Crude oil of 445,000bopd is allocated to refining to meet domestic product supply. Payments are effected to the Federation Account by NNPC after adjusting for Crude and products losses and pipeline repair and management cost incurred during the period”.

 NNPC also lifts Crude oil and Gas other than Equity and Domestic Crude oil on behalf of the Department of Petroleum Resources, DPR, and the Federal Inland Revenue  Services, FIRS, proceeds which are remitted into the Federation Account, AljazirahNigeria revealed that  it is part of this proceeds that are largely unaccounted for by the top management players in  the industry.

Interestingly, Aliko Dangote has added another fillip to the revelation coming from the National Assembly on the Gas revenue.

With a sharp like appetite for the takeover of business deal, AljazirahNigeria gathered that despite the controversial contract awarded for repair of the Portharcourt refinery, it may end up like other previous contract awarded for the Turn Around Maintenance, TAM, of the ailing refineries in Kaduna, Warri and Portharcourt as Dangote extend his grip on the oil sector.

Specifically, this newspaper gathered that Dangote and his lobbyists have infiltrated into the rank of National Assembly leadership to insert a clause in the PIB that will make him the sole exporter of Crude oil in Nigeria.

The United States recently raised the alarm, describing  Dangote Group of Companies’ business strategies as disastrous to the Nigerian economy. Owned by Africa’s richest man, Aliko Dangote, it is the largest conglomerate in West Africa with over 30,000 employees.

A report published in 2010 on Wikileak’s website said even though Dangote played a major role in Nigeria’s economy, “Many products on the country’s import ban list are items in which it has major interests”.

“Although an undiluted success in terms of wealth accumulation, Dangote personifies the duality in Nigeria’s economy”, the American government said while maintaining that the duality, “Presents a dilemma for the country’s economic policy”.

It accused Dangote Group of blocking investment that the company may see as major competitors, noting that “Weighing everything in the balance, we believe the Dangote model is harmful to Nigerian and American interests in the long run”.

The American government further warned, “Unfortunately, the Dangote model will likely be the one most emulated until its beggar-thy-countrymen contradictions become more apparent”.

It is safe to say the assertion of the U.S. government has been evident in some of the tactics employed by the conglomerate.

Dangote Group faced wide criticisms in the past years over what detractors described as favouritism from the Nigerian government.

The company faced backlashes after it called for a total ban on tomato importation in 2019 when it started its tomato processing subsidiary.

Barely two weeks ago, the conglomerate proposed a provision in the Petroleum Industry Bill, PIB, seeking to ban the importation of oil by companies without refining licences, which according to the company, will help spur investments in Nigeria’s oil and gas industry.

Dangote also recommended that the volume of fuel imported should be distributed according to what each refinery produces.

Aliyu Suleiman, a chief strategist at Dangote, suggested the anti-competition approach during a visit by members of the National Assembly’s joint committee on PIB to the company’s project site.

The group proposed that only companies with licences to refine crude oil should import fuel whenever demand surpasses available fuel or when a refinery is undergoing maintenance.

The recommendation came at the time Dangote Group was on the verge of completing a 650,000 barrels-per-day refinery in Lagos.

Financial experts, however, said the Dangote refinery should not be allowed to become a monopoly in the manner of the state-run NNPC, although it remained unclear how the conglomerate would be prevented from holding a monopoly if the controversial clause made it into the PIB.

This is also evident in the reopening of land borders to Dangote Group in November last year, when it was allowed to transport its products to neighbouring West African countries.

Nigeria had shut its land borders in August to give room for the consumption of home-grown products, but the access granted to the company was said to be based on an authorization issued by the President Muhammadu Buhari-led administration.

A businessman and founder of Stanbic IBTC, Atedo Peterside, faulted the move.

He asserted that it portrayed Nigeria’s economy as favouring only the well-connected.

“Allowing legitimate exporters and importers to move their goods across the border should be a no-brainer”, Mr. Peterside said in a tweet.

“Why refuse everybody else and allow only one company (Dangote)?”

He added, “This is why some of us argue that the Nigerian economy is rigged in favour of a handful of well-connected persons”.

A spokesman for Dangote Group Tony Chiejina could not be reached for comment as his mobile line was unreachable for a reaction to the damning allegations.

Recall, in 2007, Nigerian business tycoon; Aliko Dangote, had acquired a controlling stake in the third largest refinery in Kaduna for an undisclosed sum, consolidating his grip on the OPEC member nations’ refining sector.

It was the second major refinery purchased by Dangote who is a major financier of the then ruling party, the Peoples Democratic Party, PDP, an ally of former President Olusegun Obasanjo, after he bought the largest refinery in Port Harcourt in May 2007.

Wired to the corridors of power by the Bureau for Public Enterprise, BPE refused to give detail of the transactions. In the weeks leading to Obasanjo’s departure, Dangote’s privately held company also scooped a cement plant, a telecoms license and mining concessions in a rush of privatization that has triggered cronyism by competitors in the sector.

Dangote, got another deal, a 110,000 barrels a day Kaduna plant, after the government rejected as too low a $102M bid by China National Petroleum Company, CNPC, at the May 2007 auction. In that auction a consortium led by Dangote called Bluestar paid $561 million for a controlling stake in Port Harcourt refinery complex, which can process up to 210,000 barrels a day.

The Bluestar Consortium also includes Nigeria Conglomerate Transcorp , TCNPLG, fuel retailer Zenon and China Sinopec 0386HC. Transcorp and Zenon have close ties to the former President Olusegun Obasanjo.

The decision by the Federal Government to rehabilitate the Port Harcourt refinery   has attracted wild criticisms from within and without  as  industry watchers are unanimous  in their assertions that the Buhari’s administration  is preparing ground for the takeover of the refinery by  Dangote cum Obasanjo’s last minutes deal in office when he sold the Kaduna and Port Harcourt refineries to the business tycoon.

The Federal Executive Council, FEC, had approved $1.5 billion (about N600 billion) for the rehabilitation of the Port Harcourt refinery.

The FEC approved the amount at its virtual meeting held last Wednesday and presided over by President Muhammadu Buhari. The approval comes amid a controversial price increase in the pump price of petrol that was later reversed.

Although Nigeria has four refineries, all government-owned, it currently imports virtually all its refined petroleum products.

The Minister of State for Petroleum, Timipre Sylva, who briefed reporters after the FEC meeting said the rehabilitation will be done in three phases of 18, 24 and 44 months.

He said the contract was awarded to an Italian company, Tecnimont SPA, who, according to the minister, are experts in refinery maintenance.

Mr Sylva said the funding of the repairs will be from many components including the Nigerian National Petroleum Corporation, Internally Generated Revenue (IGR), budgetary provisions and Afreximbank.

“The Ministry of Petroleum Resources presented a memo on the rehabilitation of Port Harcourt refinery for the sum of 1.5 billion, and that memo was $1.5 billion and it was approved by council today.

“So we are happy to announce that the rehabilitation of the productivity refinery will commence in three phases. The first phase is to be completed in 18 months, which will take the refinery to a production of 90 percent of its nameplate capacity. The second phase is to be completed in 24 months and all the final stages will be completed in 44 months and consultations are approved.

The minister also said a maintenance company would also be put in place to ensure an effective maintenance culture. “Talking about operations and maintenance, that has been a big problem for our refineries and that was also exhaustively discussed in council and the agreement is that we are going to appoint a professional operations and maintenance and operations company to manage the refinery when it is finally rehabilitated”, he said.

“It is actually one of the conditions presented by the lenders, because the lenders said they can give us the money if we have a professional operations and maintenance company and that already is embedded in our discussions with the lenders. We’re not going back on that”, he said.

The Minister assured that rehabilitation works on Kaduna and Warri refineries would also be carried out on or before May 2023. “And I believe that this is good news for Nigeria.” But Many Nigerians and stakeholders believe the government is playing the script by Aliko Dangote’s controlling bid in the oil sector. Godwin Emefiele, Governor of the Central Bank of Nigeria, CBN, has said that the Dangote Refinery would sell refined petroleum products in Naira when it commences production.

According to the News Agency of Nigeria, NAN, Mr Emefiele said this on Saturday during an inspection tour of the sites of Dangote Refinery, Petrochemicals Complex Fertiliser Plant and Subsea Gas Pipeline projects at Ibeju Lekki, Lagos.

The CBN Governor said that the first shipment of Urea from the Dangote Fertiliser Plant would begin in March to help boost agricultural practice in the country. The CBN Governor noted that the 15 billion dollar projects being constructed by the Dangote Group would save Nigeria from expending about 41 per cent of its foreign exchange on importation of petroleum products.

“Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira”, Mr Emefiele said.

“That is the element where foreign exchange is saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with freight will be totally eliminated.

The apex bank governor explained that this will make the price of Nigeria’s petroleum products cheaper in naira. “If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira”, Mr Emefiele said.

“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency”, Mr Emefiele said. The approval of the $1.5 billion to rehabilitate the refineries is expected to be greeted with mixed feelings as the country has in the past spent billions of dollars on refinery maintenance. Despite such expenditure, however, the refineries have not worked with many experts calling for their privatisation.

Dangote Oil Refinery is 650,000 barrels per day, BPD, integrated refinery project under construction in the Lekki Free Zone, Lagos, Nigeria. It is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility.

The Pipeline Infrastructure at the Dangote Petroleum Refinery is the largest anywhere in the world, with 1,100 kilometers to handle 3 Billion Standard Cubic Foot of gas per day. The Refinery alone has a 400MW Power Plant that is able to meet the total power requirement of Ibadan DisCo.

The Refinery will expectedly meet 100% of the Nigerian requirement of all refined products and also have a surplus of each of these products for export. Dangote Industries Limited invested about $12 Billion. Dangote Petroleum Refinery will create a market for $11 Billion per annum of Nigerian crude. It is designed to process Nigerian crude with the ability to also process other crudes.

Culled from AljazirahNigeria