THE Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, has reaffirmed that the company is not hindering the growth of local refineries in Nigeria.
Kyari made this statement yesterday while presenting his vision for Nigeria’s energy future at the opening ceremony of the 42nd Nigeria Association of Petroleum Explorationists (NAPE) Annual International Conference and Exhibition in Lagos.
The event was themed “Resolving the Nigeria Energy Trilemma: Energy Security, Sustainable Growth, and Affordability.”
His comments come amid recent controversies involving oil marketers and the Dangote Refinery.
As the special guest of honor at the event, Kyari dismissed allegations that NNPCL is undermining the efforts of domestic refineries, emphasizing that NNPCL is a part-owner of the Dangote Refinery. He highlighted that this investment is a strategic initiative to bolster domestic fuel supply.
In a recent interview with Bloomberg, Aliko Dangote revealed that NNPCL was initially supposed to acquire a 20% stake in the refinery, but this has since been reduced to 7.2%. Dangote explained that the original agreement, valued at $2.79 billion, included an upfront payment of $1 billion. However, after renegotiations, NNPCL opted to lower its equity stake.
“They’ve made a big mistake, but that’s where we are now,” Dangote noted, emphasizing that the agreement is now finalized, with the Dangote Group holding the majority of the refinery’s shares. He elaborated, “We reached an agreement where they would pay us $1 billion as part of a $2.79 billion deal. They paid that $1 billion about a year and a half ago. The remaining balance was to be paid in two parts: the first part would deduct $2 from the balance every time they supplied us with crude (approximately 300,000 barrels) until the debt was settled, and the second part would come from their profits. However, NNPC decided to withdraw from this arrangement, perhaps due to confusion or misunderstanding, and opted to pay the remaining balance in cash.”
Kyari provided an update on NNPCL’s collaboration with local refineries, stating that the company plans to partner with private refineries to ensure a consistent and affordable supply of petroleum products, as well as to engage in Naira-for-crude transactions to stabilize the local currency and manage foreign exchange markets.
He added that this initiative will lead to the expansion of gas infrastructure, including projects like the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline and the Obiafu-Obrikom-Oben (OB3) Gas Pipelines, along with the development of cleaner energy alternatives such as Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG).
Kyari also noted that NNPCL has ceased importing refined petroleum products and is now sourcing fuel exclusively from the Dangote Petroleum Refinery and other local refineries.
“Today, NNPC does not import any products; we are solely relying on domestic refineries,” he confirmed.
It is important to note that NNPCL was the exclusive off-taker of Dangote’s Premium Motor Spirit (PMS) until the Federal Government allowed other marketers to source directly from the refinery.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) recently announced that it has secured a direct lifting agreement with Dangote Refinery, ensuring a reliable and affordable supply of PMS products nationwide.
During the event, Kyari also shared that the company has finalized plans to establish 12 Compressed Natural Gas (CNG) mother stations and mini LNG plants in the near future, aiming to enhance the existing 1.6 billion standard cubic feet of gas supply for the domestic market.
“The energy trilemma is a significant responsibility we bear as custodians of Nigeria’s energy future. NNPC Ltd. is diligently working to improve our supply chain, develop new refining capacities, and expand our retail network,” he stated.
Kyari emphasized the company’s commitment to improving domestic energy access, stating that significant project launches, including CNG mother stations, mini-LNG plants, and additional CNG daughter stations, are expected within the next 3-6 months.
He commended President Tinubu’s initiatives to alleviate foreign exchange pressures by reducing fuel imports and enhancing Nigeria’s local refining capabilities, highlighting the importance of collaboration, innovation, and technology in achieving Nigeria’s energy objectives.
“Addressing the energy trilemma requires bold ideas, shared knowledge, and collective resolve. Together, we can create a Nigeria where energy is secure, sustainable, and affordable for everyone,” Kyari concluded.
He also reiterated NNPCL’s mandate to ensure energy security as outlined in the Petroleum Industry Act of 2021, stating that the company has developed partnerships and investments aimed at boosting local production and generating revenue for economic diversification.
