NUPRC Directs Dangote Refinery To Adhere To Due Process And Be Prepared To Pay For Supply Of Crude Oil
THE Nigerian Upstream Petroleum Regulatory Commission, or NUPRC, has mandated that Dangote Refinery adhere to the correct procedures while supplying crude oil and prepare to cover the cost of such supplies.
The NUPRC reports that the Dangote refinery and other regional crude oil refining facilities in Nigeria have been lamenting a feedstock scarcity.
Consequently, the commission's enforcement committee was given instructions by NUPRC Chief Executive Gbenga Komolafe to develop a template for the efficient implementation of the Domestic Crude Oil Supply Obligation.
The directive was given by Komolafe in accordance with Section 109(2) of the Petroleum Indus Act 2021 during a meeting to examine the DCSO.
Remember that in September 2021, Lekki Refinery Funding Limited and the Nigerian National Petroleum Company (NNPC) signed a forward sale agreement for the delivery of 35,000 barrels of crude oil per day to the Dangote refinery.
It turns out that the 35,000 barrels of crude oil per day are for the settlement of a $1.036 billion (N426.2 billion) funding deal from Lekki Refinery Funding Limited. This funding was used to finance a 20 percent investment in Dangote Refinery for $2.76 billion, of which $1 billion was paid to Dangote Refinery and $36 million was for transaction costs.
The facility's interest rate is 6.125 percent plus the three-month LIBOR. The plan was for the agreement to start on August 30, 2023.
The NNPC agreed to pay Dangote Refinery 100% of any dividend declared by the refinery during the payback period and a $2.5/bbl discount on the official selling price per barrel on 300,000 barrels per day in order to complete the $2.76 billion for the 20% stake.
NNPC Greenfield, a special-purpose vehicle that NNPC owns 100% of, is holding this investment on behalf of NNPC.
The remaining $1.76 billion in equity investments made in DPRP FZE will be paid when the refinery project is completed, either on April 1, 2023, or on any other date that the parties (NNPC and Dangote Oil Refining Company Limited) agree upon. This will be done by deducting $2.5 per barrel from the official selling price per barrel for the 300,000 barrels that NNPC sells to DPRP FZE each day, as well as by giving NNPC 100% of any dividend that DPRP FZE declares during the repayment period.
Some Nigerians reacted with mistrust when the federal government approved NNPC's acquisition of the shareholding. A number of Nigerians publicly accused the NNPC of overpaying for the 20 percent of the world's second-biggest refinery, which produces 650,000 barrels per day, and said the sale was fraudulent.
Mele Kyari, the CEO of NNPC, stated back in 2022 that Nigeria will be able to continue selling to the privately held refiner for a minimum of 20 years.
“NNPC owns 20 per cent equity in the Dangote Refinery and has a first right of refusal to supply crude oil to the plant. But we saw this energy transition challenge coming. We knew that time would come when you would look for people to buy your crude and you would not find it.
“And that means we have locked down the ability to sell crude oil for 33,000 barrels minimum by right for the next 20 years and by right also we have access to 20 per cent of the production from that plant,” he said.
Nigeria will no longer import refined fuel by the middle of 2023, as Kyari had boasted.
Dangote Refinery has now started selling petroleum goods, especially diesel, to local wholesalers in the meantime. This move follows news that the NNPCL has started selling Premium Motor Spirit (PMS) to IPMAN, the Independent Petroleum Marketers Association of Nigeria, directly again.
Despite the fact that IPMAN currently pays NNPCL around N600 per litre for gasoline, the marketers said that an agreement had been reached to remove over 20 million liters of diesel from the refinery every week.
No comments:
Leave comment here