This is what Dangote’s deal with NNPC is all about

The Nigerian National Petroleum Corporation (NNPC) will partner with the ‘under-construction’ Dangote refinery in Lagos, in a bid to turn Africa’s largest economy into a fuel supplier for the continent, according to the new Managing Director of the NNPC, Mele Kolo Kyari.

The Dangote refinery which is being built by billionaire Aliko Dangote, is set to be Africa’s largest; and Kyari told Reuters in an interview that the facility would be a win-win for entrepreneur and country.

“Ultimately, it will be a contract to supply crude,” Kyari said. The NNPC boss added that the state oil firm intends to be a “supplier of first resort” for the Dangote refinery.

The Dangote refinery would have a capacity of 650,000 barrels per day (bpd) upon completion.

Nigeria imports almost all of the petrol it consumes, no thanks to comatose local refineries. The nation would be leaning on Dangote to ‘wet’ the local market while working to get some of the local refineries functioning again.

“It’s worth it,” Kyari said of NNPC’s refinery overhauls, adding that Nigeria could become a fuel supplier to the entire region. “Africa needs refining capacity,” he said.

Transparency at long last at NNPC?

While Nigeria is considering both government and private funding in its oil sector after the refinery revamps, third parties would maintain and operate the state-owned refineries to ensure reliable production.

Italy’s Maire Tecnimont is already working on the Port Harcourt plant, with Italian refiner ENI as an adviser. 

Kyari said that some ambitious proposals, including selling down government stakes in upstream oil and gas joint-venture agreements and changing the way it pays NNPC’s portion of the bills owed under those deals, were on hold for the moment.

The government still intends to sell its stakes in local refineries to less than 40%, Kyari said.

However, he noted that there was currently no framework in place for the sales.The NNPC has long been criticized for the opacity of its operations and the corruption that hovers over its dealings, but Kyari said he will soon begin publishing the full list of those holding the nation’s crude oil contracts and the firms who won deals to swap Nigeria’s crude oil for products, along with audited accounts of NNPC’s books, to usher a regime of transparency.

He said the openness, and a plan to improve commercial terms for oil companies, would spur investment that has been hampered by uncertainty and opacity.

 “We are going to do everything possible to make that open, the businesses open, so that people can actually predict what we’re going to do next,” Kyari said.

President Muhammadu Buhari appointed Kyari to take over from the retiring Maikanti Baru as NNPC GMD on June 20, 2019.