Fuel Price Hike: We Incur Cost from 47 Government Agencies, says Dangote Refinery

David Bird, managing director (MD) of the Dangote Refinery, says the refinery incurs costs from 47 government agencies, adding some form of fees to the final pump price of petrol in the country. 

Speaking during the a press conference in Lagos on Monday, Bird said the Federal Government of Nigeria still treats the refinery as the customer of last resort, suggesting that the best crude oil grades are sold to interantional buyers.

Calling on Nigeria to prioritise local refining at this time of extreme volatility and uncertainty in the crude oil market, the refinery MD, requested that the government prioritises selling certain grades to the local industry.

“All countries are being very self-interested. China has banned exports. In fact, many many countries with a refining industry, have banned exports, Thailand, Vietnam,” he said.

“Other countries with a strategic reserve are releasing their strategic reserve. But bear in mind, they won’t be releasing that on the open market. They will be releasing those strategic reserves to ensure that their domestic industry gets preference.

“That is the role that the Nigerian government should be considering right now — self-interest. That means ensuring that the domestic refining industry in Nigeria, gets access to crude. Abundant access to crude the right grades of crude. Prioritise the domestic industry.”

“I would also Advocate that all government agencies look at their contribution to taking cost out of the of the value chain. We still feel there’s a lot of regulatory impost at every step of our processing, whether that’s regulator, whether it’s NPA, whether it’s NIMASA. We have 47 different government agencies that we deal with and we incur costs from.

I think there’s a role for every government agency to really look hard at what’s their contribution to take cost out of the supply chain. Most importantly, the role of Nigeria is to look after Nigerians, and that would be securing ample crude supply to Nigeria’s domestic refining industry.”

Dangote refinery imports exported Nigerian crude

The MD of the refinery said the government does not prioritise Dangote Refinery, and this leads to even higher cost of crude oil.

Explaining this, Bird said the refinery puts forward a list to the government every month but the government fulfils orders from abroad first, and the refinery then has to buy from the international market, from traders who would have added their own cut.

“We put forward every month a whole raft of the of the grades; we love Bonny Light, we love escravos… the priority, I feel is just more that the domestic refining industry are seen as customers of first preference, rather than customers of last resort, and we just don’t understand the dynamics,” he said.

We fully understand that some of them have certain commitments in place with international operators. Fully acknowledging that is just trying to be transparent on the allocation method and where we sit in that pecking order, and what are the constraints being faced by NNPC to allocate those grades to the domestic refining, industry rather than being allocated to international traders.

He said “because the ones we ask for, we then find are coming back on the market, through an international trader. That’s what’s disappointing.”

“Why can we not get? So it’s less about the individual grade and more understanding the methodology being used by the government and NNPC to allocate those grades. Such that we are prioritised under the crude for naira program to the domestic industry. Before it gets sold to an outfit in Geneva who then take their their cut and then sell it back to us.”

The pump price of a litre of petrol has increased by more than N350 following the Iran-US war, which led to the closure of the Strait of Hormuz.