Downstream operators re-echo fears of monopoly
By Kenneth Jukpor
Despite the numerous economic benefits anticipated with the development of Africa’s biggest refinery by Dangote Group, the refinery appears to be missing in the federal government’s new national pipeline structure connecting all refineries and tank farms in the country.
The National Pipeline and Storage Company (NPSC) revealed this even as it stressed that the proposed pipeline structure would be 5 meters below ground-level to prevent vandalization, with additional 25 meters depth at volatile areas.
NPSC, the subsidiary of the Nigerian National Petroleum Corporation (NNPC) with the mandate to ensure efficient transport crude oil to refineries and transport petroleum products from refineries and other sources to storage facilities, has focused on upgrading the nation’s pipeline system following the gross deterioration having existed for more than four decades and the menace of vandalization.
The General Manager, Pipelines, NPSC, Engr. Danladi Ahmed, disclosed this during an exclusive chat with MMS Plus newspaper at the 13th OTL Africa Downstream Week.
When quizzed on the consequence of the $4.5billion pipeline project without link to Dangote’s 650000 barrels per day (bpd) refinery, the NPSC boss remarked that it was a costly oversight.
While the NPSC General Manager noted that five organizations have tendered their Expression of Interest proposals for the national pipeline project, he said NPSC would attempt to schedule a meeting with the Dangote Group to correct the omission.
Speaking on the new national pipeline infrastructure, Engr. Danladi said, “Within the next the next thirty-six months we have plans to change the entire national pipeline assets. We have already done the frontal engineering which took about twelve months. We are ready to go into the execution process. We have designed every linkage of the pipeline including the depots.”
In another development, indigenous operators in the downstream sector have reechoed fears that Dangote’s venture into refining could eliminate their businesses.
The CEO, Eterna PLC, Mr. Mahmud Tukur had posited that the emergence of Dangote Refinery could eliminate the modular refineries as well as depot owners and marketers.
“Nigerian downstream companies have invested significantly in building depots. Nevertheless, a large amount of these depots are idle and there is a concern that the advent of the Dangote refinery would be the final nail on the coffins (depots) and marketers. How would you measure your impact on these operators?” Tukur asked the Dangote Group Executive Director under his platform as Vice Chairman of Depots and Petroleum Product Marketers Association of Nigeria (DAPPMAN).
Recall that MMS Plus published a lead story article titled, “$17million Dangote Refinery: Panic, Fear Grip Indigenous Oil Operators Over FG’s Protection” in 2017, where the Managing Director of Ibanfo Oil and Gas Limited, Mr. Mamemo Ibru expressed fears that Dangote refinery may become a monopoly in the oil refining industry.
“My company is also planning on going into refining. We intend to develop a refinery in Calabar but if big refineries like Dangote’s come up with the huge resources and obvious support by the government. We have to be careful.” Ibru told our correspondent, revealing fears of a domination which threatens investors in refineries and other petrochemical plants.
In his response, Dangote’s Group Executive Director, Edwin dispelled fears that the emergence of the refining company would lead to the elimination of modular refineries and tank farm operators, positing that the Nigerian market is big enough for all players while Dangote also plans to export.
According to Edwin, Dangote’s business strategy has never been to eliminate its competitors, as competition was always a motivation to improve the company’s products and services.
Having observed the palpable fear of private investors in the downstream sector, the Chairman, Nigerian Ports Consultative Council, Otunba Kunle Folarin, admonished Nigerians not to be perturbed as the benefits of Dangote refinery outweighs the perceived fears.