Modular refineries in Nigeria have voiced their agreement with concerns raised by Africa’s wealthiest individual, Aliko Dangote, regarding the sabotage efforts by certain groups in the oil sector. These groups, often referred to as mafias, are accused of thwarting efforts to refine crude oil domestically for the production of Premium Motor Spirit (PMS) and other petroleum products.
Operators of these refineries, under the umbrella of the Crude Oil Refinery Owners Association of Nigeria (CORAN), have previously highlighted these issues but received little response. Dangote’s recent comments have brought renewed attention to their plight.
CORAN, a body representing both modular and conventional refinery companies in Nigeria, claims that these mafias have significantly hindered the country’s domestic petroleum supply, affecting the entire economy. Publicity Secretary Eche Idoko emphasized that the presence of these powerful groups has long been a barrier to self-sufficiency in the oil sector.
Last week, Dangote revealed at the Afreximbank Annual Meetings in The Bahamas that both local and international cartels, which he likened to mafias, repeatedly attempted to sabotage his $19 billion refinery project in Lagos. He detailed how these groups attempted to push his project into financial default during the COVID-19 pandemic by influencing international banks. Support from institutions like Afreximbank was crucial in overcoming these challenges.
CORAN asserts that the high prices of petroleum products, especially PMS, are a key factor behind the inflation in Nigeria, particularly affecting food costs. Idoko pointed out that in-country refining could mitigate these expenses. He stressed the need for the Nigerian government to adopt policies similar to other OPEC members, which have special arrangements to support domestic crude supply.
The Minister of State for Petroleum Resources, Heineken Lokpobiri, recently stated that Nigeria would continue to comply with OPEC’s production adjustments to stabilize the global oil market. However, CORAN argues that such adjustments benefit importers of petroleum products at the expense of local refiners.
Idoko questioned the government’s engagement with stakeholders on energy efficiency and supply issues, noting multiple failed attempts to meet with the President. He urged President Tinubu, who also serves as the Minister of Petroleum, to clarify his stance on promoting domestic refining versus continued reliance on imports.
Dangote also mentioned that international oil companies have denied him access to crude, doubting the success of his 650,000 barrels-per-day refinery. He stressed the necessity of the refinery for Nigeria and sub-Saharan Africa and expressed confidence that these obstacles are temporary.
Modular refinery operators highlighted their struggle to secure financing due to the lack of crude supply guarantees. Despite having licenses, many refiners face significant delays in receiving funds from international financiers who seek assurances of crude availability for their projects. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has stated it cannot guarantee crude supply to refineries not yet operational.