The excitement surrounding the launch of the Dangote Petroleum Refinery in Lagos is quickly giving way to a more complicated reality as days go by.

While the refinery’s operations marked a significant step in Nigeria’s efforts to refine petroleum locally, issues have arisen, particularly regarding access to products and pricing, casting shadows over the initial optimism.

For days now, petroleum marketers, represented by the Independent Petroleum Marketers Association of Nigeria (IPMAN), said they have been completely left out of. Despite NNPC Limited lifting petrol from the Dangote Refinery last Sunday, marketers still struggle to access the product, according to a report by BusinessDay.

Abubakar Maigandi, IPMAN’s president, was candid about the situation, explaining that the marketers are still relying on old stocks of petrol as they await clarity on pricing from NNPC Limited. According to him, the price uncertainty has left marketers at a standstill.

“We have not been supplied petrol from Dangote Refinery as we wait for the NNPC on pricing,” he said.

“We are still selling old stocks of petrol. There is still so much uncertainty about pricing or when we will lift Dangote petrol,” the IPMAN President stated.

However, Dangote Refinery told Vanguard it has been making strides in delivery. As of this week, the refinery reported that it had delivered 111 million liters of petrol in just three days, far surpassing NNPC’s earlier assertion that the refinery could only supply 16.8 million liters.

A spokesperson from Dangote confirmed that loading operations were ongoing and that they would continue supplying the market.

“We are refining and have no reason not to load. So, loading is ongoing and we would continue to provide the product to the market,” The Group Chief Branding and Communications Officer of Dangote Refinery, Anthony Chiejina, stated.

Contrary to this assertion, a source within NNPC suggested that Dangote’s operations were struggling to meet initial promises, thus casting doubt over the refinery’s capacity to end Nigeria’s dependency on fuel imports anytime soon.

This uncertainty isn’t just a bump in the road—it underscores deeper complications that have dogged the nation’s petroleum sector for years.

The Pricing Controversy and A Deepening Rift

The heart of the matter lies in the price dispute that erupted between NNPC Limited and Dangote Refinery shortly after the refinery began operations. Last Monday, September 16, NNPC released its pricing details for petrol from Dangote Refinery, stating that it was purchasing the product at an eye-watering price of N898 per liter. This announcement sent shockwaves across the industry, as this figure seemed exorbitantly high for locally refined petroleum, sparking controversy and criticisms even among stakeholders.

Dangote Refinery, however, pushed back almost immediately, refuting NNPC’s claim. According to the refinery’s management, the crude oil processed was not yet part of the naira-dollar transaction arrangement that was meant to take effect in October. They argued that the current pricing should reflect the global market in which crude is still purchased in dollars, not naira. However, the refinery did not say how much it was selling to the NNPCL.

An Industry Still in Flux

The ramifications of this pricing dispute are significant. Across Nigeria, petrol prices have soared, with some locations reporting prices as high as N1,000 per liter, while others hover around N1,200. This disparity has left many wondering when, or if, the full benefits of local refining will be felt by everyday Nigerians.

The price debate which has escalated over the week has prompted the question: if the refinery is supposed to reduce Nigeria’s dependence on imports and stabilize prices, why are local consumers still grappling with such high costs?

The roots of the current price controversy stretch far beyond this single transaction between NNPC and Dangote Refinery. For years, Nigeria’s petroleum sector has been hamstrung by a tangled web of policy, subsidy programs, and mismanagement. NNPC, historically, has maintained a near-monopoly on fuel imports and distribution, a control mechanism that has left it at the center of nearly all pricing disputes.

At the heart of the price dispute is the cost of the crude oil purchase made earlier by Dangote Refinery. The refinery has explained that the feedstock was purchased in dollars and thus, must be sold accordingly. This means the naira-based deal made between the Nigerian government and Dangote Refinery will only take effect following the exhaustion of the current feedstock. The refinery said that it will begin in October.

Against this backdrop, many believe that NNPC is used to setting prices unilaterally, thus, reaching a consensus with Dangote on pricing will birth friction.

As Nigeria moved to deregulate its downstream petroleum sector, expectations were high that private sector players like Dangote Refinery would usher in a new era of price stability and transparency. But as seen in this case, the complexities of pricing, supply agreements, and government policies mean that even with the country’s largest refinery now operational, old issues of distrust and inefficiency still plague the system.

The Ministry of Petroleum Resources (Gas) has moved to clarify the reasons behind Dangote Group’s decision to abandon the much-anticipated 1,200km subsea gas pipeline project. Contrary to what many may have believed, the Ministry insists that government policies had nothing to do with the project’s suspension, stating that the move was purely a business decision.

This disclosure, contained in a statement signed by Louis Ibah, spokesperson to the Minister of Petroleum Resources (Gas), Rt. Hon. Ekperikpe Ekpo, pushes back against recent comments made by a senior official from Dangote Group.

Devakumar Edwin, Vice President of Dangote Industries Limited, during a webinar hosted by Nairametrics, had alluded to policy roadblocks as the reason for pulling the plug on the pipeline, a project that would have transported natural gas from offshore sources to Nigeria’s shores. These comments sparked a flurry of backlash, leading to the Ministry stepping in with its version of events.

In its response, the Ministry explained that the decision to scrap the pipeline project was made long before President Bola Ahmed Tinubu took office, stressing that it was a business choice driven by internal factors within the Dangote Group. The Ministry noted that the Tinubu administration has made significant strides to promote private sector investments, especially in the gas value chain, and any assertion to the contrary would be misleading.

“The attention of the Honourable Minister of State Petroleum Resources (Gas), Rt. Hon. Ekperikpe Ekpo, has been drawn to the recent statement attributed to the VP Oil and Gas of Dangote Group, regarding the abandonment of plans to build a 1,200km subsea gas pipeline due to government policies,” the Ministry’s statement read.

It further clarified, “Hon. Ekpo notes that the decision to build or abandon the project was solely a business decision of the Dangote Group, taken long before the inauguration of the President Bola Ahmed Tinubu-led administration.”

Policy-Friendly Environment Under Tinubu

Far from hindering private sector participation, the Ministry listed several government policies introduced to encourage investment in Nigeria’s gas sector. Among these initiatives are the Gas Pricing & Domestic Demand Regulations (2023), the Natural Gas Pipeline Tariff Regulations (2023), and the Petroleum Industry Act (PIA) of 2021, which is seen as a landmark framework aimed at revolutionizing Nigeria’s oil and gas sectors.

Under President Tinubu, the Ministry insists, Nigeria’s gas sector has been receiving significant attention, with the government doing everything within its power to encourage private entities like Dangote Group to participate in gas infrastructure development. Several gas projects have already been commissioned, further evidence that the Tinubu administration is not only gas-friendly but is also prioritizing the sector as a cornerstone for the country’s economic growth.

Dangote’s Version: Business as Usual or Policy Struggles?

Edwin had pointed fingers at existing policies that, in his view, restricted the company’s ability to fully explore opportunities in the gas sector. He noted that policies at the time did not allow a single entity to operate across the upstream, midstream, and downstream sectors of the oil and gas industry, which complicated Dangote Group’s plans for the subsea pipeline.

But that wasn’t all. Edwin also cited another policy that granted the Nigerian government ownership of gas pipelines, regardless of who constructed them, as another significant obstacle. According to him, these hurdles were enough to put the ambitious project on ice.

While Dangote Group’s narrative makes a compelling case for why the pipeline project was shelved, the Ministry strongly disagrees with Edwin’s assertions. It maintains that the Petroleum Industry Act (PIA), signed into law in 2021, offers extensive incentives for private entities to invest in both the midstream and downstream gas sectors. The Ministry also argues that the policies currently in place are designed to remove such bottlenecks, not create them.

“There is no provision in the Petroleum Industry Act (PIA) or its predecessor policies and legislation that discourages private sector investment in gas infrastructure,” the Ministry’s statement noted. This direct rebuttal challenges the perception that government regulations have been stifling potential projects in the gas value chain.

Toward A Profitable Nigerian Gas Sector

The back-and-forth between the government and Dangote Group sheds light on the broader complexities of Nigeria’s gas industry. As the country seeks to diversify its economy away from oil, gas is becoming a crucial sector that could provide long-term energy security and significant revenue streams. For this to happen, however, the government needs the full backing of the private sector.

In recent years, Nigeria has been positioning itself as a gas giant, with vast untapped reserves and strategic initiatives aimed at boosting local production. The Tinubu administration has prioritized gas as part of its broader economic strategy, underlining investment in gas infrastructure as key to achieving energy sustainability. The government has also pushed forward with the National Gas Masterplan, a blueprint designed to harness the country’s gas potential.

The fate of the 1,200km subsea gas pipeline may be sealed, but the broader discussion about Nigeria’s gas sector is far from over. For Dangote Group, the decision to shelve the project appears to have been rooted in pragmatic business considerations, while for the government, it is a missed opportunity. Nevertheless, the Ministry of Petroleum Resources (Gas) remains optimistic that its policies will continue to attract private investors.

The clarification from the Ministry paints a picture of an administration keen on building bridges, not roadblocks, for private enterprises eager to invest in the gas value chain.