Logistics Tragedy: FG Excludes Dangote Refinery In New National Pipeline Architecture

 Logistics Tragedy: FG Excludes Dangote Refinery In New National Pipeline Architecture

·  Downstream operators re-echo fears of monopoly 

·  Traffic congestion looms on Lekki axis

By Kenneth Jukpor

The federal government has concluded plans to build a new national pipeline structure connecting all refineries and tank farms in the country without linking Dangote refinery.

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 last week 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.”

Meanwhile, Dangote refinery may begin operations in December 2020 without provision of access roads, railway or pipeline to evacuate products, increasing fears of a possible logistics tragedy which has characterized the Apapa and Tin Can port access roads.

Responding to questions from our correspondent on the impending logistics constraints to cargo evacuation from the refinery, the Group Executive Director, Capital Projects and Portfolio Development, Dangote Industries Limited, Mr. Devakumar V. G. Edwin, said that the refinery would utilize shuttle vessels for evacuation of 70% products while the other 30% would be carried via roads.

Edwin told MMS Plus that Dangote Group intends to build a road linking Lekki to Epe while he also noted that the Lagos State Government had promised to provide another road connecting Lekki that would be tolled.

With Dangote refinery scheduled to begin operations next year, stakeholders have expressed worry as neither the road by Dangote nor the Lagos State Government road, has begun construction; yet the refinery edges closer to completing mechanical construction.

The facility, at full production will be able to produce 50,000,000 litres of gasoline and 17,000,000 litres of diesel daily, as well as aviation fuel and plastic products. However, without rail or alternative roads as proposed, transport experts have warned that Lekki may become a more horrifying traffic chaos than the Oshodi-Apapa route, especially as the federal government’s new pipeline network excludes the refinery.

Edwin also revealed that the shuttle vessels to be utilized by Dangote refinery would be owned by ship-owners or charterers; stressing that Dangote Group was trying to divest from transportation following the numerous challenges it has faced as the largest trucking company in the nation.

Speaking with MMS Plus on the proposed use of shuttle vessels for crude affreightment, the President of Nigerian Indigenous Ship-Owners Association (NISA) Mr. Aminu Umar, stressed that the nation’s waterways channels have to be dredged to support such activities.

Aminu who is also the CEO of Sea Transport Services Nigeria Ltd, described the proposed use of shuttle vessels as a welcome development for Nigerian ship-owners, saying, “We thank Dangote and his Group for considering this option that would develop the business of shipping. What would happen would be development in terms of the business of ship-owners”

He opined that waterways channels would have to be further dredged so that bigger vessels with larger quantity can be utilized instead of the smaller vessels operating in the country at the moment. However, he also stated that the challenge of security could be an impediment.

“Security is still an issue especially when sailing to the Niger-Delta area from Lagos. We are awaiting the new security plan to be unveiled by the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Ministry of Transportation. The security of Nigerian waterways would also have to be enhanced by the Nigerian Navy and NIMASA to support Dangote’s waterways ambition”, Aminu told our correspondent.

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.

Otunba’s argument was on the premise that the possibility of a monopoly in the sector by Dangote refinery didn’t outweigh the efficiency and the fact that the refinery would replace the nation’s huge dependence on imports for petroleum products and the loss of forex.

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