The Dangote Refinery, Africa’s largest single-train refinery, has revealed that more than 60 percent of the crude oil it processes is imported, despite Nigeria being a major crude producers.
In a worded BusinessDay advertorial response to the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Dangote management said with its operations, Nigeria has been positioned as a primary source of affordable petrol feedstock for West Africa.
The Refinery stated that the claim that the price of petrol in Togo is lower than in Nigeria is incorrect, stating that the average pump price in Lomé stands at approximately 680 CFA francs per litre, equivalent to N1,826.
It alleged that DAPPMAN and some of its members are disproportionately focused on the importation of refined products even admitting to round-tripping, whereby petrol produced by the Dangote Refinery is re-imported from Togo into Nigeria at a markup.
“What, then, is the business ratonale behind this practice, especially when considering the substantial additional cost of transporting petroleum products from Lomé to Lagos – costs that fun into billions of Naira.
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“If their true intention is to serve the Nigerian domestic market, why not join the growing list of local partners of the Dangote Refinery? These partners, in addition to receiving high-quality products, benefit from volume-based discounts, credit facilities and logistics support, all designed to enhance local availability and affordability of petroleum products for the Nigerian people, at a recommended rate by all parties,” it stated.
It decried that for some operators, the business has never truly been about delivering petroleum products to Nigerian consumers, but seeking arbitrage opportunities, where they can easily triple the value of the products by diverting them to more lucrative martets in the sub-region.
The Refinery said that these inflated volumes were factored into the justification for subsidy claims.
“At one point, Nigeria’s daily consumption was reported to be as high as 93 million litres, a figure grossly overstated, as the actual consumption is less than half that amount. A figure that was kept high in the heat of COVID-19 when there was hardly movement.
“Beyond the subsidy claims, these exaggerated volumes have also been used to underpin crude swap agreements. If Nigeria is said to consume 93 million litres daily, it logically follows that an equivalent volume of crude must be supplied in the swap deal. Unfortunately, much of this crude is then diverted and resold for the personal gain of vested interests,” it added.
DAPPMAN responding to the recent price reduction by Dangote Refinery at the weekend had said that the price cuts often create price shocks that undermine competition and impose financial strain on fellow market participants, as they were often strategically timed when other importers had active cargoes at sea or in tanks.
The association also stated that even more concerning is the refinery’s pattern of offering lower prices to international buyers while quoting higher rates to local offtakers, stressing that it contradicts public-facing claims of prioritising Nigerians.
