The group managing director of the Nigerian National Petroleum Corporation (NNPC) Mr. Mele Kyari, said yesterday that the federal government would not use its money to acquire the proposed 20 per cent stake in the 650,000 bpd Dangote Refinery.
Recall that the NNPC had, in May, announced that the government was holding talks with Dangote Refinery to have 20 per cent equity in the refinery.
But speaking on Channels Television, Kyari said the money to buy the shares would be borrowed.
“We are borrowing on the back of the cash flow of this business. We know that this business is viable, it will work and it will return dividends.
“It has a cash flow that is sustainable because refinery business, in the short term, will continue to be sustainable. That’s why banks have come forward to lend to us, so we can take equity in this.
“There is no resource-dependent country that will watch a business of this scale, which is bordering on energy security and has implications for fiscal security of the country, and you don’t have a say. And for us, as a strategy, we started this process long before Dangote started his refinery project.”
He said the NNPC takes equity in very significant businesses anchored on the oil and gas operations: fertiliser, methanol plants, modular refineries and others.
He said the Dangote refinery would start production by 2022 adding that the corporation was also working to revamp its refineries.
“We are also working on our refineries, to ensure that we fix them. We have awarded the contract for Port Harcourt refinery rehabilitation. And ultimately we are going to close that of Warri and Kaduna very soon in July, so that all of them will work contemporaneously.
“The net effect is that you are going to have an environment where Nigeria becomes the hub of petroleum products and supply. It’s going to change the dynamics of petroleum supply globally in the sense that the flow is coming from Europe today and it is going to be reversed to some other direction.”
He also said Nigeria would be the supplier for West Africa and many other parts of the world.
On the retail price for petrol, Kyari said the price of the product should be more than N280/litre at which diesel is being sold.
Kyari said smuggling of petrol from Nigeria had impacted negatively on the Nigerian oil sector but added that this would not lead to another closure of the borders.
The NNPC boss said although petrol evacuation by NNPC in Nigeria was currently about 60 million litres daily, the corporation was sure that consumption was not up to that volume.
He said organised smuggling was the reason for the huge consumption volume, stressing that the low petrol price of N162/litre was also an incentive for this.
“Today we are paying N162/litre (for petrol). I am sure many people buy AGO (diesel) in the market and it is selling at N280/litre in the market today.
“So (there is) nowhere in the world diesel is more expensive than PMS. That means that the price of petrol anywhere in the world assuming you are going to sell it at the market, you are going to sell it above that price you have seen,” he said.
He further said the meetings between the government and the organised labour on petrol price was yet to be concluded and could extend beyond July.
He explained that negotiations on the cost of petrol would have to be concluded to enable the government effect a change in the cost of the commodity.
