Petroleum Industry Bill

By Zayyad I. Muhammad

One entity that will benefit most from the Petroleum Industry Act (PIA ) is Aliko Dangote, with his 650,000 barrels per day integrated refinery, which is Africa’s biggest and the world’s biggest single-train facility. The refinery has 1,100 kilometres of pipeline to handle three billion Standard Cubic feet of gas per day. In addition, it has power plants with a combined capacity of about 400MW.

Section 317 (8) of the Senate version of the PIA noted that petrol importation license would be restricted “only to companies with active local refining licenses”. This clause and the unmatched prowess occasioned by the refinery is a formidable edge for Dangote. However, some report state that the federal government has reversed these exclusive petrol importation rights.

Dangote can have absolute control of the petroleum industry’s downstream and midstream sectors. How? Dangote can acquire the numerous idle fuel stations scattered nationwide or take over one of the established major retail marketers, though most idle stations are not strategically located. However, Dangote can revive and utilise them using the price advantage- by setting an unbeatable price, and a litre is a litre strategy, employing the best domestic workforce in the downstream sector and optimising modern technology for service delivery in these stations.

The petroleum retail industry is growing in Nigeria. The growing number of fuel stations across corners of the country is proof of this. But operational and logistical gaps remain in the blooming industry, like bad roads coupled with the use of old trucks, poor remuneration of drivers, and lack of modern technology. Thus the industry is losing billions of Naira due to shortages when truck discharge petroleum products at fuel stations and the rising disputes between drivers and station managers.

Furthermore, some marketers have poor welfare systems for staff and have not put in place some feasible plans for the realities that will accompany the arrival of the Dangote Refinery in the PIA regime. As a result, many of them may end up operating in the dark. For any marketer to survive the new regime, they must set up a strong think-tank or a special unit in their R&D departments to ‘look’ at the future, opportunities and threats and opportunities that Dangote Refinery will come with.

With his current economic capacity, Dangote can exploit oblivious lapses to implement backward integration in the petroleum industry. The $100 million Dangote-Sinotruck plant in Lagos will give Dangote an advantage in the logistics and operations sector. The plant assembles trucks and cars in Nigeria for local use and export; it is 65 per cent owned by Dangote and 35 per cent by Sinotruck. Therefore, having new petroleum distribution trucks and well-trained and well-paid drivers will not be difficult for Dangote.

The Dangote Refinery will give him the required volume of products and enough loading bay for trucks to load. The refinery covers 2,635 hectares of land, six times the size of Victoria Island, Lagos. Scarcity will not be challenging for Dangote if he ventures into retail. Dangote can tap the domestic workforce to employ the best hands in the downstream sector. With access to funding and resources, Dangote can deploy massive Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG) skids at once in as many stations as possible to also prepare for the future.

As mentioned, if Dangote acquires these thousands of idle fuel stations or any of the established major marketers, the brand can offer mouth-watering prices at these stations, making customers travel even 5km just to purchase petroleum products at a Dangote station. Furthermore, these prices can knock many competitors out of the market. However, some of them can still survive as third-party partners to Dangote. However, the NNPC can take advantage of its $2.76 billion stake in the Dangote Refinery and boast its retail business.

With this colossal refinery, Dangote has the advantage in the midstream and downstream of the oil and oil gas industry. Anyone coming in will need the next ten years to catch up. The bigger, the more advantageous, it seems!

Zayyad I. Muhammad writes from Abuja via zaymohd@yahoo.mom.

By Adamu Bello Mai-Bodi

The member representing Bauchi Federal constituency, Hon. Yakubu Shehu (Wakilin Birni) pulled up his trousers and went into the gutters to ensure Bauchi State is rightly apportioned what it deserves from the Federal Government. Furthermore, the lawmaker moved a motion during the plenary on Thursday 15, July 2021, seeking to declare Bauchi State an oil-producing state given that oil exploration started in 2018 in Alkaleri LGA of the state. This is nothing short of bravery; it depicts Yakubu’s sheer love and concern for the development of his state.

Yakubu boldly puts it bare on the floor that it has become imperative to ascertain the fortunes at the disposal of the Federal Government in Alkaleri LGA so as to hasten the process of giving effect to the provisions of the new Petroleum Industry Bill, 2021, in terms of the economic benefit the host community stands to gain.

As a Bauchi citizen, I couldn’t hold back my applause when Yakubu asserted that any community from whose location oil is discovered and or produced is entitled to some extra monetary packages for the upkeep of its environment, infrastructure and health impact. He went further and bolder to make a case for the people of Bauchi to start benefiting from the 13% derivation being the constitutional right in the form of an incentive to the host community.

As expected, the motion, which Hon. Mansur Manu Soro seconded nearly divided the House for obvious reasons, one of which is that there are no reports of production from the Kolmani Well. Notwithstanding, the Ayes have it after a third submission by the Speaker of the lower chamber. It is a crying shame that most of southern Nigeria’s media houses hypocritically reported that the House overwhelmingly rejected the motion despite the fact that the Speaker ruled in favour of the Ayes.

By sponsoring such a critical motion, Wakilin Birni has won a bravery medal for himself and some degree of prestige and assurances for the Pearl of Tourism. Moreover, the motion gives Bauchi people a sense of victory, for it puts Gombe’s unfounded contest over the oil field to a permanent rest. It also serves as a groundbreaking argument for declaring Bauchi an oil-producing state in the country, which shall come to pass God willing.

However, the most crucial component of the brave Yakubu’s motion was his prayer to mandate the committee on petroleum resources (upstream) to invite the Nigeria National Petroleum Corporation (NNPC) to give a comprehensive presentation on the level of work in the oil exploration currently undertaken in Alkaleri and the successes recorded. This is because we don’t want to be taken for a ride or fall into the same ditch as the Mambila hydropower project that was nearly completed on paper. Bauchi people and Nigerians need to know what is going on in the Kolmani River.

As I applaud Hon. Yakubu, I want to assure him that all well-meaning Bauchi citizens are solidly behind him on this. He must not relent, especially on mandating the committee on petroleum resources (upstream) to invite the NNPC to give a progress report on their undertaking of oil exploration in our state.

Adamu Bello Mai-Bodi writes from Gidado Bombiyo residenceK/Kaji Azare. He can be reached via 08067481928.