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The NNPC Limited and Dangote Refinery Limited (1), by Afe Babalola (SAN)
The NNPC Limited and Dangote Refinery Limited (1), by Afe Babalola (SAN)
The Dangote Petroleum Refinery was expected by many Nigerians to be the end to petroleum importation and petroleum product scarcity in Nigeria. Sadly, the actualisation of this expectation has been an up-hill and almost an insurmountable task. This is because of the position of the Nigerian National Petroleum Corporation Limited, NNPC Ltd., on the refining and sale of petroleum products from the Dangote Refinery Limited.
First, NNPC limited was reluctant to supply the crude oil needed to operate the Dangote Refinery. Dangote Refinery had to import crude oil from the United States of America and Brazil(an unprecedented event in the history of Nigeria), and was even in negotiation with some African countries for the importation of crude oil to Nigeria. By September, Dangote Refinery had imported 57 ship loads of crude oil into Nigeria. The NNPC limited only agreed to supply crude oil to Dangote Refinery after the intervention of the Federal Government.
Second, NNPC delayed in lifting Premium Motor Spirit, petrol or PMS, from Dangote Refinery, even after the product was ready for circulation. Dangote Refinery informed the press at the time that it was waiting for NNPC limited to lift the PMS for distribution in Nigeria.
Third, NNPC delayed in announcing the price of the PMS from Dangote Refinery. According to the representative of Dangote Refinery, only the NNPC limited can fix the price for the product since the NNPC controls price of petroleum products.
All these put NNPC limited at the centre of the petroleum production, pricing and distribution in Nigeria, thus establishing a monopoly. This is the hypothesis that has been created by the prevailing events between NNPC Ltd and Dangote Refinery over the past three months.
This article puts this hypothesis to the test in view of extant laws. Consequently, the provisions of the Petroleum Industry Act, 2021 will be considered in relation to the role that the NNPC has played so far in the ‘NNPC-Dangote rift’ as the press describes the relationship between the NNPC Ltd and Dangote Refinery.
To put the question into context, this article will examine whether the NNPC Ltd has the power to:
1. Supply crude oil to local refineries,
2. Determine the price of petroleum products, and
3. Act as the sole purchaser and distributor of petroleum products in Nigeria.
The Petroleum Industry Act, 2021.
The Petroleum Industry Act, 2021, PIA, is the act which regulates and governs the Nigerian petroleum industry. It prescribes the powers of the major actors in the petroleum sector in Nigeria.
The PIA empowers the Minister of Petroleum to incorporate the NNPC limited. The PIA further prescribes the powers of the NNPC Ltd. These are that the NNPC limited is to:
(a) carry out petroleum operations (this refers to various processes involved in the exploration, extraction, refining, transportation and marketing of petroleum products) on a commercial basis, comparable to private companies in Nigeria carrying out similar activities.
(b) Be the concessionaire of all Production Sharing Contracts, PSC, Profit Sharing Contracts and Risk Sharing Contracts as the National Oil Company on behalf of the Federation. A production sharing contract is the contract for the exploration, development and production of petroleum on the terms that the financial risk-bearing party shall recover costs and receive a share of the profit based on a share of production as established in the contract).
(c) Lift and sell royalty oil (fixed percentage of the crude oil conceded to Nigeria under the PSC) and tax oil (30% of the total production allocated as full payment of any and all royalties and taxes payable to the government) and on behalf of the Nigerian Upstream Regulatory Commission for an agreed commercial fee and in case of profit oil (the amount of oil explored above the expected extraction quota under a Production Sharing Agreement) and profit gas payable to the concessionaire.
(d) Carry out test marketing to ascertain the value of crude oil and report to the Nigerian Upstream Regulatory Commission.
(e) Be vested with the rights to natural gas under production sharing contracts entered into prior to and after the effective date of this Act
(f) Carry out the management of production sharing contract for a fee, based on the profit oil share or profit gas share in accordance with paragraph C
(g) Assume the working interest of the NNPC in all its joint operating agreements
(h) Engage in the business of renewables and other energy investments
(i) Promote the domestic use of natural gas through development and operation of large-scale gas utilisation industries.
(j) Maintain the role of NNPC under section 54 of this Act.
(k) Carry out task requested by the commission or authority on a fee basis and engage in activities that ensure national energy security in an efficient manner, in the overall interest of the Federation.
(l) Carry out such other tasks as may be determined by the Board of the NNPC Limited, and
(m) Make NNPC Limited supplier of last resort for security reasons.
(See generally section 64 of the PIA)
The Nigerian Midstream and Downstream Petroleum Regulatory Authority
In relation to the hypothesis being tested by this article, there is another agency of interest. This agency is the Nigerian Midstream and Downstream Petroleum Regulatory Authority created by section 29 of the PIA. This authority was empowered by section 31 of the PIA to:
a) Regulate midstream and downstream petroleum operations, including technical, operational and commercial activities.
b) promote a competitive market for midstream and downstream petroleum operations
c) promote the supply and distribution of natural gas and petroleum products in midstream and downstream petroleum operation and the security of natural gas supply for the domestic gas market
d) ensure compliance with applicable laws and regulations governing midstream and downstream petroleum operations
e) ensure crude oil supply for domestic refineries
f) promote, establish and develop a positive environment for international and domestic investment in midstream and downstream petroleum operations
g) develop and enforce a framework on tariff and pricing for natural gas and petroleum products.
See generally section 31(c), (d), (e), (f), (g), (j) and (l) of the PIA.
Section 32 of the PIA provides for the function of the Nigerian Midstream and Downstream Petroleum Regulatory Authority. This include:
a) providing pricing and tariff frameworks for natural gas in midstream and downstream gas operations and petroleum products based on the fair market value of the applicable petroleum products
b) regulating the bulk storage, distribution, marketing and transportation pipelines of petroleum products.
c) ensure security of supply, development of the markets and competition in the markets for natural gas and petroleum products. d) promote the interests of consumers with regards to midstream and downstream petroleum operations
e) promote the principles of economic development of infrastructure with regard to midstream and downstream petroleum operations.
f) promote competition and private sector participation in midstream and downstream petroleum operations. See generally section 32(e), (f), (h), (n), (s) and (u) of the PIA.
Private Sector involvement in the Midstream and Downstream Petroleum operations
In furtherance of the intendment of the PIA to welcome and sustain private sector participation in petroleum operations in Nigeria, privately owned refineries, like the Dangote Refinery, have the statutory liberty to obtain licenses or permits from the Minister of Petroleum on the recommendation of the Nigerian Midstream and Downstream Petroleum Regulation Authority – section 111(1) of the PIA. This is dependent on whether the applicant:
1. Meets technical standards required for petroleum operations based on good international petroleum industry policies.
2. Has its facilities in a location and on an area of land acceptable to the Authority.
3. Provides proof that the facility meets the health, safety and environmental standards as may be determined by the Authority. 4. Provides for the efficient and economic use of facilities and pipelines.
5. Shows that the facility does not involve excessive capital or operating expenditures.
6. Shows decommissioning and abandonment plans and funds to implement the plans presented
7. Provides for the elimination of routine natural gas flaring in its facility
8. Will not conflict with existing licenses
9. Has a detailed programme for the recruitment and training of Nigerians in all phases of petroleum operations it handles, and for the provision of scholarship schemes, internships, continuous professional development and other training requirements.
In the realm of the Niger Delta, where the mighty rivers flow and the Atlantic Ocean’s waves crash against the shore, a legendary entity has emerged to safeguard the nation’s maritime interests. Tantita, a name synonymous with protection and vigilance, has become the embodiment of maritime and economic security in Nigeria.
Tantita’s significance extends far beyond its role as a mere maritime security agency. It is a power of hope, a shining example of Nigeria’s determination to protect its waters and harness its economic potential. With its unbending commitment to security and stability, Tantita has become the guardian of Nigeria’s maritime realm, ensuring the safe passage of vessels and the uninterrupted flow of commerce.
Tantita’s impact on Nigeria’s economy cannot be overstated. By protecting the nation’s maritime assets and preventing piracy, oil theft, and other illicit activities, Tantita has helped to safeguard the country’s economic lifeline. The agency’s efforts have ensured the continued flow of oil and gas revenues, which are vital to Nigeria’s economic well-being.
Its significance extends beyond the realm of economics. It is a symbol of national pride, a testament to Nigeria’s ability to protect its sovereignty and defend its interests. The agency’s personnel: Chief Government Oweizide Ekpemupolo, Chairman, Mathew Tonlagha, Vice Chairman, Chief Kestin Pondi, the Managing Director and Tare Pondi, General Manager Operations and Technical, are the unsung heroes of Nigeria’s maritime domain, working tirelessly to ensure the security and stability of the nation’s waters.
The federal government should disregard the evil cry of satanic forces against Tantita and instead, continue to support the agency’s efforts to protect Nigeria’s maritime interests. Tantita’s work is crucial to the nation’s economic survival, and any attempts to undermine its efforts would be detrimental to the country’s well-being.
As we celebrate Tantita’s significance, we must also acknowledge the challenges that lie ahead. The agency requires continued support and resources to effectively discharge its mandate. We must rally behind Tantita, providing it with the necessary tools and equipment to carry out its duties. By doing so, we can ensure the continued security and stability of Nigeria’s maritime domain and pave the way for a brighter economic future.
I hold strongly, that Tantita is more than just a maritime security agency; it is a guardian of Nigeria’s economic interests, a symbol of national pride, and a legendary hope for the nation’s future. Its significance cannot be overstated, and its efforts will continue to shape Nigeria’s economic destiny.
Prof. BEN BINEBAI
In a grand gesture of benevolence, His Excellency, Governor Sheriff Oborevwori, has bestowed upon the land a monumental decree, approving a staggering N275 billion worth of transformative projects. This majestic initiative promises to reshape the very fabric of Delta State, ushering in an era of unprecedented growth and prosperity.
The Governor’s visionary leadership has yielded a cascade of innovative endeavours, designed to elevate the lives of Delta State’s citizens. Some of the key projects include:
Two brand-new flyovers shall pierce the skies, one at Uromi Junction, a haven of progress in Ika, and the other at Otovwodo Junction, a beacon of hope in Ughelli. These structures shall not only ease trafficy congestion but also symbolize the Governor’s commitment to modernizing Delta State’s infrastructure.
A multitude of road projects shall crisscross Delta State, connecting key communities and fostering a spirit of unity and cooperation. These roads shall facilitate the movement of goods and services, stimulate economic growth, and improve the overall quality of life for Delta State’s citizens.
Critical hospital equipment shall be bestowed upon medical facilities, ensuring the well-being of Delta State’s subjects. This initiative shall enhance the state’s healthcare system, providing citizens with access to quality medical care and treatment.
Rural electrification projects shall bring light to the darkest corners of the realm, kindling a new era of productivity and growth. This initiative shall empower rural communities, stimulate economic activity, and improve the overall standard of living for Delta State’s citizens.
These bold initiatives, born from the wisdom of Governor Oborevwori’s leadership, shall transform Delta State, unlocking its true potential and securing a brighter future for generations to come. The people of Delta State shall rejoice, knowing that their Governor prioritizes their welfare and prosperity above all else.
As Delta State embarks on this journey of transformation, the Governor’s resolve remains unwavering. With a focus on transparency, accountability, and inclusive governance, His Excellency shall guide Delta State toward a future where progress knows no bounds. The Governor’s commitment to the people of Delta State is evident in his tireless efforts to improve their lives and create a more prosperous and equitable society.
Governor Sheriff Oborevwori’s N275 billion development drive is a testament to his visionary leadership and commitment to the welfare and prosperity of Delta State’s citizens. These transformative projects shall reshape the state’s infrastructure, economy, and social fabric, ushering in a new era of growth, prosperity, and development. State’infrastructure,economy, and social fabric, ushering in a new era of growth, prosperity, and development.
Ben Binebai, Special Guest Columnist
For the attention of Bola Tinubu led Federal Government.
As the gods of old once decreed, the fate of nations hangs in the balance, awaiting the stroke of justice and equity. The creation of Toru-Ebe State is a divine imperative, a sacred mandate that echoes through the firmament, beckoning the attention of mortals and immortals alike. Like a mighty river bursting its banks, the collective voice of the Ijaw people thunders forth, demanding recognition and representation.
In this momentous hour, the very fabric of destiny trembles with anticipation. The stars align in propitious conjunction, signaling the dawn of a new era for the Niger Delta. The winds of change whisper secrets to the trees, as the earth itself begins to stir with the promise of renewal. The time for Toru-Ebe State is a time of reckoning, a moment when the threads of history are woven anew, and the fate of a people is forever sealed.
Toru-Ebe State creation stands as the authentic and lasting solution to the Ijaw people’s generational problems of balkanisation and political oppression. It is the key that unlocks the shackles of marginalisation, freeing the Ijaw nation from the chains of historical injustices. Toru-Ebe State will herald a new dawn of unity, purpose, and collective prosperity for the Ijaw people.
Let the clarion call of Toru-Ebe resound across the land, a celestial cry that shakes the foundations of power and awakens the slumbering giants of justice and equity. May the gods of the land smile upon this noble endeavour, guiding the hands of those who shape the destiny of nations. The creation of Toru-Ebe State is not merely a mortal desire; it is a divine necessity, a testament to the indomitable will of a people who refuse to be silenced.
Ben Binebai,
Special Guest Columnist