Financial Energy Review
…………..by Jenifer Dike………..
The National Assembly may revisit some of the provisions contained in the Petroleum Industry Act (PIA) and the agreement between the Nigeria National Petroleum Corporation ( NNPC) and the Dangote Refinery.
The House is thinking of making a new provisions in the PIA to ensure that Refineries established in Nigeria whether in the free Zone or anywhere must source their feeedstock in-country.
This is coming on the heels that the Group Managing Director (GMD), NNPC Mallam Mele Kyari had told the House of Representatives that once a refinery is established, such a rfiney is at liberty to source their feeedstock anywhere in the world. “The basic thing you must do is to have your feed stock and that feed stock cannot be enforced on any refinery anywhere in the world” he said.
Adding that in the case of Dangote Refinery no document was signed to encourage them source feedstock anywhere in the world. Rather it was agreed that since NNPC is to hold an equity share in the Refinery, 300,000 out of the Refinery’s 650,000 barrel per day capacity will be sourced in country.
The House of Representatives’ Committee on Finance stated that it would be a disservice to the country to have abundance of crude while investors in the refineries were allowed to buy petroleum products from other countries.
Kyari, had on Wednesday told the committee that apart from the Federal Government securing an equity stake of 20 per cent at $2.7bn in Dangote Refinery, the NNPC had to reach a deal with the company to secure a market for the country’s crude.
The chairman of the Committee on Finance, James Faleke made the statement while responding to Mele Kyari statement to the effect that Dangote Refinery can choose where to buy crude for processing.
“We structured our equity participation on the basis of the fact that this refinery must buy at least 300,000 barrels per day of our production into this refinery. This guarantees your market,” Kyari said.
James Faleke, however, expressed the reservations of the lawmakers, said: “If it is true that those who are investing in refinery construction in Nigeria, have in the agreements or whatever they have signed with Nigeria, that they can buy crude oil anywhere because they operate in a free trade zone, then those who have signed those documents must have done a disservice to Nigeria.”
“I thought that the idea of investment in refineries in Nigeria, even though it is a free trade zone, should be able to utilise our crude oil. But if it is not, then, what is the essence?”
Faleke who was not happy about the development, said, “We can also make a law to make any import of crude oil to be contraband. We cannot have a product and somebody else will be importing the same product and kill our own economy. No way! We are ready to fight this and defend the country.”
While responding to another question by the lawmakers, the GMD of NNPC said the Petroleum Industry Act and the Dangote Refinery would end product importation in the country.
Kyari, who indicated that the NNPC had since made profits, said it would be officially announced by the President, Major General Muhammadu Buhari (retd.).
