…manufacturers, airlines in crucial meetings with refinery
…Nigeria may become lifting hub, say experts
Some local and global dynamics relating to the supply and sale of petroleum fuels, as well as industry efficiencies, pricing and priorities, are set to change as the $18.5 billion, 650,000-barrels-per-day Dangote Petroleum Refinery based in Lagos, Nigeria’s commercial capital, gets set to kick off operations in the coming days.
To this end, various industry groups are engaging in frantic discussions concerning terms, conditions and timing for the supply of refined fuels from Dangote Refinery.
These groups include the Manufacturers Association of Nigeria (MAN), the Airline Operators of Nigeria (AON), among others.
Dangote Refinery has so far confirmed it has received four of the expected six tranches of one million barrels of crude each, saying the remaining two tranches are due in the next few days and that it will launch operations before the end of January 2024.
Designed for 100 per cent Nigerian crude with the flexibility to process other crudes, the Dangote Petroleum Refinery can process most African crude grades, Middle Eastern Arab Light and even US Light tight oil, as well as crude from other countries.
It has the capacity to meet 100 per cent of Nigeria’s requirement of all refined petroleum products, including petrol, diesel, kerosene, jet fuel, and liquefied petroleum gas (LPG), also known as cooking gas, with a surplus of each of these products heading for export.
Industry watchers say the Dangote Refinery will transform Nigeria from a producer of crude oil to a net exporter of refined fuels, earning foreign exchange and attracting spin-off businesses, including shipping, which will generate jobs in the local industry and earn taxes for Nigeria.
It will further enhance the efficiency of Nigerian industries by sustaining a steady supply of diesel fuel at competitive prices and is expected to make savings from the elimination of imports costs on refined products.
It is anticipated that the refinery will stabilise the supply and prices of refined products including petrol, diesel, kerosene, aviation fuel, LPG, among others, but industry experts warn that price slashes from the facility would be unlikely, especially in the immediate.
Dangote Refinery will kick off with the production of diesel and aviation fuel and add other listed products as it progresses, the company says.
As such, manufacturers and airline operators in the country have been engaging with the company concerning supply contracts.
Local airlines under the aegis of the AON and local manufacturers on the platform of the MAN have begun plans aimed at getting Dangote Petrochemical Refinery to priotise diesel and JetA1 supplies to local carriers and manufacturers.
This followed the announcement that the refinery would commence production with the roll-out of diesel and aviation fuel this month.
Chairman of United Nigeria Airlines and spokesperson for AON, Prof. Obiorah Okonkwo, is reported to have said that local carriers had begun talks with the management of the refinery, expressing hope that the talks would be fruitful.
“We are talking with him and hope that it will be fruitful,” Okonkwo reportedly said while responding to an inquiry on whether local airlines had plans to begin talks on aviation fuel supply with the Dangote Refinery.
MAN likewise said its members were meeting with the aim of coming up with a position for possible presentation to the Dangote Refinery management.
MAN President, Francis Meshioye, reportedly said the association was meeting to determine whether an arrangement would be made with Dangote Refinery on the supply of diesel to its members.
The Chief Executive Officer, Belujane Konzult, and former spokesman for the defunct Nigerian Airways, Chris Aligbe, said aviation fuel was the highest single cost factor in airline operations and as such was a critical consideration.
“Fuel is the highest single cost factor in airline operation, so, when we have such things skyrocketing, the airlines will be in a very terrible situation,” Aligbe said.
“They will take a beating and transfer the cost to the passengers, otherwise, they won’t survive. No one expects the local airlines to bear that burden without passing it on to their passengers. That’s the situation we find ourselves in,” he said.
Aviation watchers say once the Dangote Refinery establishes and sustains the production and supply of aviation fuel, international airlines would make stopovers in Nigeria to lift fuel, apart from the passenger consideration component.
