The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has called upon President Bola Ahmed Tinubu’s government to facilitate an increase in the Nigerian National Petroleum Company Limited’s (NNPC Ltd) investment in Dangote Refinery and Petrochemicals from its current 7% to a minimum of 45%.
According to the group, this enhancement is deemed essential for bolstering energy assurance and security for the populace.
PENGASSAN also urged the Federal Government to establish strategic reserves for petroleum products, recommending collaboration with private sector stakeholders to manage the existing petroleum storage facilities across the six geopolitical zones of the nation.
Once operational, these reserves would store petroleum products, releasing them only during supply shortages.
The association believes this initiative would mitigate the impact of poor road conditions and chronic shortages caused by severe erosion, which often result in long queues at fuel stations nationwide.
During a media briefing in Lagos on Tuesday, PENGASSAN President, Comrade Festus Osifo, articulated these points while presenting the association’s communique and recommendations from the 3rd edition of PENGASSAN’s Energy and Labour Summit (PEARLS 2024).
Osifo and the Secretary-General of PENGASSAN, Comrade Lumumba Okugbawa, co-signed the communique.
Osifo emphasized the need to intensify local production of petroleum products. He also noted that the floating of the naira, which led to its devaluation, significantly contributed to the elevated fuel pump prices due to the dollar-to-naira exchange rate, rather than solely attributing it to the removal of the fuel subsidy by President Bola Tinubu on May 29, 2023.
Furthermore, he pointed out that this situation has resulted in increased revenue for the Federation Allocation Accounts Committee and enhanced revenue generation by government agencies and parastatals.
Osifo said: “Ramping up efforts to make the nation’s four refineries work; once operational, the government should divest majority shareholdings and own at most 49% of the shareholding in the four refineries. Core investors will be brought in to take the 51% as applicable in NLNG.
“Expansion of pipelines that could be used in the delivery of refined petroleum products across the length and breadth of the country as this will reduce the pressure put on our roads by trucks carrying these products.”
He also called for more provision of Compressed Natural Gas (CNG) infrastructures across the country.
He stated that CNG has been adjudged to be the most affordable and cleaner form of energy that is required to propel a car in the country today.
“Sadly, the infrastructure for this product is sparsely distributed across the country. The government, through its partners, should deepen the reach of these infrastructures across every city in Nigeria.
“To achieve energy security, energy must be affordable. To ensure affordability, the Government must do all it can to stabilize the exchange rate as the continuous slide of the Naira will greatly hamper the affordability of energy in Nigeria.
“The summit called on the federal government to develop and strengthen the country’s oil and gas value chain to ensure a more efficient and reliable downstream distribution system. Without such a system, the country would continue to face recurring fuel shortages as its reliance on a truck-based distribution system is deficient and inadequate to meet the demands of Nigerians, given its vulnerability and disruptions due to bad roads, flooding and ad-hoc logistics arrangements.
“The dynamics of Nigeria’s energy demands require a multifaceted approach with a diversified Energy Mix of all available sources of energy to ensure robust energy security.
“The summit emphasized the need to strike the right balance between harnessing our vast hydrocarbon resources and embracing renewable energy as a pathway for enhancing Nigeria’s energy security.
“Nigeria currently depends mainly on fossil fuel as its primary Energy source; as the world transitions to greener energy, the implementation of the Nigeria Energy transition plan was examined.
“The Summit concluded that nothing much has been done to enhance Nigeria’s Energy mix. This becomes imperative as global financing of fossil fuel-related energy becomes challenging.”
He added: “The Government should give more incentives to attract the International Oil and Gas Companies and the Indigenous Oil and Gas Producers to invest in more crude oil production in the next five years.
“50% of the accruable revenue should be dedicated to investing in renewable energy like solar, batteries, wind, hydrogen, hydro, etc.
“Most IOCs are currently involved in developing Greener Energy strategies and businesses across the globe. Nigeria’s government must partner with them to accelerate and deepen this in the Nigerian market.
Nigeria’s Government must urgently develop a practical and implementable Energy mix policy, he said.
“This will set the policy direction and become the basis for negotiation with institutions and stakeholders who intend to invest in different energy sources.”
Osifo said that IOCs already contracted the sale of their crude in advance, adding that it would not be automatic for them to cancel the crude they had already agreed to sell and supply them to Dangote Refinery.
He said: “What those companies said is if Dangote wants them to supply them immediately, it should pay some premium. So, the issue of premium was what led to the initial conversation about the Dangote Refinery and the allegation that they were not supplying crude oil to the refinery.
“Coming to that of the NNPC Ltd, it has its own crude. Some years ago, the Buhari government borrowed money from Afreximbank. Some of the crude was tied to paying back the crude.
“So literally, what Dangote should have done is that it should have started discussing crude supply five years ago. You do not start discussing crude supply six months into production.
“You start it and sign contracts five years ago. You know that this is the direction we want to go. So that opportunity was initially lost. “And as Nigeria, so the crude was already tied down to paying for the loan.”
