The decision by the Federal Government to acquire 20 percent equity stake in Dangote Refinery will engender confidence and attract more private sector investors into the development of more refineries and the entire oil and gas industry, experts and players in the industry have said.
On Wednesday, the Minister of State for Petroleum Resources, Timipre Sylva, said in Abuja that the Executive Council of the Federation (FEC) at its last meeting gave approval to the plan to acquire 20 percent minority stake by the Nigerian National Petroleum Corporation (NNPC) in the Dangote Petroleum and Petrochemical Refinery.
Sylva, who announced the approval at the end of the virtual meeting presided by Vice President Yemi Osinbajo said the value of the acquisition was about $2.76 billion.
Reacting to the announcement, the Chief Executive Officer, Dateline Energy Services Limited, Wilson Opuwei, said the approval by FEC was a step in the right direction for the country.
“It makes sense for the NNPC to invest in ventures that will bring returns to the company. Every business needs good investments and this is what the NNPC is doing with the Dangote Refinery.
He said the refinery would ensure energy security, as the Refinery was capable of meeting Nigeria’s gasoline requirements, while generating revenue in hard currency from export of diesel, jet fuel, polypropylene, among many others.
In his view, the Registrar and Chief Executive Officer, Institute of Credit Administration, Chris Onalo, also described the decision in the right direction, as oil and gas sector, the major sources of revenue for the government, require massive investment.
Onalo commended Dangote Group for taking the bull by the horns to make a huge investment in the refinery project to jumpstart the industry.
He said such a bold step needed to be supported by other interest groups, including the government, to help solve the perennial fuel supply problem the country has been facing.
The investment from the NNPC, he noted, was to support the billions already committed by Dangote Group in the construction of one of the world’s largest single train refinery.
“The refinery is an expression of massive confidence in the oil and gas economy of this country.
“It shows that the sector can take Nigeria out of its current economic woes. I think it is a welcome development and those of us who are in the public domain can’t wait too long to see that happening.
“So, I will say kudos to the Dangote Group for its investment drive across the economy of this country,” Onalo said.
The NNPC’s support to the refinery project and others coming on stream would increase investors’ confidence in the sector, thereby attracting more investments.
Also, an economist and immediate-past Director General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said the Dangote Refinery was of strategic national importance to the country’s economy.
“My views have always been that eventhough this is a private sector project, it makes both commercial and nationalistic sense for NNPC to express an interest in it.
“This project has a good prospect to put an end to fuel importation and the associated leakages of public funds, while also preserving our foreign exchange reserves,” Yusuf said.
He said the refinery would also stimulate the growth of the economy in areas such as job creation, Agricultural development and exportation of petrochemicals to other countries.
“The proposal by NNPC to take 20 percent equity stake in the Dangote Refinery is a move in the right direction. The reality is that the Dangote refinery is a project of significant and strategic national importance, eventhough it is promoted by the private sector.
“Taking a stake in the project also makes a great deal of business sense, especially given how far the project execution has gone and our heavy dependence on importation of petroleum products.
“It also makes both commercial and nationalistic sense for NNPC to express an interest in a project that has a good prospect to put an end to fuel importation and the associated leakages of public funds.
“It would also ensure the preservation of our foreign reserves as we currently spend billions of dollars annually on importation of petroleum products,” Yusuf said.
In addition to the several multiplier effects of the refinery arising from related spin-off industries, like petrochemicals, fertilizer plants, he said the decision to acquire some equity stake by the government resonates well with the country’s aspiration for self reliance and backward integration.
Apart from that the export prospects of the Dangote Refinery were also quite bright, Yusuf said another exciting thing about the investment proposition by the NNPC was that the national oil company would be a minority shareholder, and therefore not take responsibility for the management of the refinery.
The undoing of Nigeria’s public Enterprises, he said, has been the quality of management, adding that as a country, Nigeria had paid a huge price for this, in the form of inefficiency, corruption, wastages and many more.
The former LCCI DG further said the model being proposed with the Dangote refinery was similar in a way to the Nigeria Liquefied Natural Gas (NLNG) Limited’s model, which remains the best example of how government funds should be invested.
“It is a model that shields the investment from interference by politicians and bureaucrats.
“This proposition is much better than the decision to commit scarce public funds to the rehabilitation of decrepit government owned refineries,” he added.
Similarly, the Chief Operations Officer, Dangote Oil Refining Company, Giuseppe Surace told the marketers that the refinery has been designed to process a variety of light and medium grades of crude oils, including petrol and diesel as well as jet fuel and polypropylene.
Surace said the refinery would have the capacity to produce up to 50 million litres of petrol and 15 million litres of diesel a day, roughly 10.4 million tonnes of the product, 4.6 million tonnes of diesel, and 4 million tonnes of jet fuel yearly.
He said this was in addition to having a fertiliser plant, which would utilise the refinery by-products as raw materials.
The refinery, he said, which has attained 90 percent completion, is expected to address the challenge of petroleum product importation in Nigeria and other African countries.
“If you look at the overall percentage completion, we have achieved good, considerable progress. But that on the overall includes engineering and design, which is 100 percent over.
Picture caption: L-R: CEO, OVH, Huub Stokman; MD 11Plc/ Chairman MOMAN, Adetunji Oyebanji; President/CE, Dangote Industries Limited, Aliko Dangote; MD, Total Energies Nigeria, Imrane Barry; Executive Secretary, MOMAN, Clement Isong, in Lagos.
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