Nigeria’s largest single local investment, the $20 billion Dangote refinery, faces significant challenges as it nears full operational capacity. Located on the outskirts of Lagos, this massive facility has the potential to process half of Nigeria’s daily oil output. However, recent tensions between Dangote Industries Limited and the Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) threaten to overshadow its progress.
The controversy erupted when Farouk Ahmed, head of NMDPRA, criticized the quality of the refinery’s diesel, suggesting it was inferior to imported alternatives. Ahmed’s remarks have sparked widespread backlash from industry experts who argue that the statement undermines a crucial local industry and does not reflect the refinery’s actual product quality.
Energy economist Kelvin Emmanuel criticized the NMDPRA’s stance, pointing out that Nigeria’s reliance on energy imports costs the country $2.4 billion monthly. He emphasized that the Dangote refinery could significantly reduce this dependence by producing substantial quantities of various petroleum products. Emmanuel suggested that an independent audit by reputable firms could clarify the refinery’s product quality and reassure stakeholders.
Luqman Agboola from Sofidia Capital highlighted the detrimental effects of regulatory uncertainty on investment in Nigeria’s oil and gas sector. He noted that such uncertainty deters potential investors and hampers business operations, leading to increased production costs and decreased competitiveness.
Juwon Adebayo, an energy and environmental lawyer, stressed that investors often face extensive due diligence to address regulatory and political risks. With growing global pressure to halt new fossil fuel investments, Nigeria’s regulatory challenges could further complicate the development of new oil and gas projects.
Charles Ogbeide, an energy analyst, criticized the regulator’s comments as reckless, especially given the refinery’s ongoing commissioning phase. He suggested that the negative statements may be driven by personal grievances rather than objective assessments.
Jide Pratt, country manager at Trade Grid, questioned the NMDPRA’s earlier decision to grant waivers if the products were deemed substandard. He also compared the operational status of other refineries, highlighting inconsistencies in regulatory actions.
Despite these issues, Aliko Dangote, the refinery’s owner, remains confident in the facility’s capabilities. He has challenged the NMDPRA to verify the quality of his products through impartial testing and defended the refinery’s performance, asserting that it meets high standards compared to imports.
The refinery is also facing logistical challenges, with Dangote having to source crude oil from distant suppliers due to domestic issues like theft and pipeline vandalism. As a result, the company is looking to countries like Libya and Angola to meet its crude oil needs.
Leave a Reply