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A Third NNPC Equity Stake in Dangote Refinery To Be Paid In cash

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Africa’s richest man and the President of the Dangote Group, Alhaji Aliko Dangote, yesterday disclosed that the 20 percent equity taken by the Nigerian National Petroleum Corporation (NNPC) in his much-awaited refinery will not be paid in a single cash transaction.

Speaking during a documentary aired on Arise News Channel, the renowned philanthropist noted that while a third of the $2.7 billion deal would be paid in cash, the second would be through crude sales and the third would be through profits made by the corporation.

He noted that there’s a lot of misconceptions around the planned 20 percent equity holding by the national oil company, explaining that the deal also involves all the products to be churned out by the $19 billion facilities, including petrochemicals.

Revealing that he got the inspiration to build the refinery from India, given what he described as the painful situation whereby Nigeria, a country of over 200 million people importing all petroleum products needed for consumption.

He pointed out that the project currently employs 29,000 Nigerians and 11, 000 foreigners with plans to ramp up the number to 57,000 in the coming months.

The 650,000 barrels per day refinery, located in Lagos is expected to start operation in the first half of next year, with the NNPC in the process of buying 20 percent of the refinery.

Stressing that the refinery is capable of meeting the country’s entire petrol, diesel and jet fuel needs, Dangote posited that as it stands, the country expends about 25 percent of all its import bills on bringing in petrol products into the country.

The businessmen lamented that Nigeria lost between $50 billion to $60 in investments to the delayed passage of the Petroleum Industry Act (PIA), but explained that with the recent presidential assent, investors who had been sitting on the fence are now expected to move into the country.

“So, these are the things that people don’t really understand and I want to really clarify it. When they talk about the $2.7 billion, you know, they (NNPC) are paying one third of the money.

“Another one-third of the money, again, will actually be paid through supply of crude, with the deduction of maximum of about $2 and some cents. And then one-third of it, which is another $850 to $900 million will be paid from the profit they are going to make from the business.

“So it’s not a cash transaction where they are paying all cash. You can see that if we don’t have confidence in what we are doing, we would have asked them to pay all cash,” he stated.

Dangote mentioned that one of the benefits of the refinery to Nigeria would be to stabilize the country’s currency because as of today, about 25 percent of the country’s foreign exchange goes to the importation of petroleum products.

He noted that if the country was to spend $8 billion to $9 billion for imports, for instance, that money would be saved because the refinery has the full capacity to meet every energy need of the country, whether petrol, diesel, or aviation fuel, with a lot left to export, thereby generating a lot of foreign exchange for the country.

“So you can see the difference, even our own balance of trade will change, it will strengthen also the naira because we’re not going to have this massive avalanche of dollars going out for importing finished products of our own raw material.

“This refinery that we built is very important and is going to help transform not only the oil sector in Nigeria, no, but it will also transform the entire economy of Nigeria, it will put millions of people directly or indirectly at work.

“This will massively transform the economy and by transforming the economy, the government will have more money to devote in terms of education, in terms of health and in terms of infrastructure,” he opined.

Dangote added: “It makes me feel terrible to see a country as big as Nigeria, as resourceful as Nigeria and with this sort of population that we have 200 million-plus, we’re importing all our petroleum products. I mean, it is very painful.

“So with that, I thought in my mind, and I said that somebody has to address this issue. We tried before, in 2007 like what I said earlier on, but the government of that day changed their minds, and then we jettisoned the idea and returned them.

“But right now, we came back with the support of the government to make sure that yes, we help in addressing this issue of not only Nigeria. Because I’m a Nigerian and I’ve benefited quite a lot from Nigeria and if there are issues to be sorted out, I should be one of those who will bring solutions to our national problems.”

According to Dangote, the refinery project remains the biggest in Africa today and one of the biggest in the world, adding that a lot of Nigerians were getting massive training as a way to build in-country capacity.

With the expected operationalization of the Petroleum Industry Act (PIA), Dangote expressed confidence that investors would be attracted to the country because before now, there was no incentive.

“Before there was no clarity, people were not really very ready and willing to put in their money. If you look at it, in the last couple of years, there has not been an investment. We have lost more than $50 billion to $60 billion worth of investment,” he noted.

On reasons for accepting NNPC’s 20 percent equity, he explained that it wasn’t possible for the government to sit back when a massive project like the refinery is ongoing because of the need for energy security, assuring that in three or maximum of four years, NNPC will recoup its investment.

“People keep talking about the refinery, they didn’t buy only the refinery, they bought refinery with petrochemicals. I could have actually decided to do like some of my mates here in Nigeria and just keep my money in the bank or keep the money abroad.

“But you know I’m very, very passionate about Nigeria and making Nigeria great. If it’s just the Dangote group making money, I would have just kept that money and participate in capital markets abroad where my money is in dollars and I am making money, but no.

“We know as a country we have challenges, how do we address these issues. The only way for me is not to sit and be criticizing, no, I should be part of the problem solvers and part of the change. My prayer is that I will give most of my wealth when I am alive,” he said.

Also, the Governor of the Central Bank of Nigeria (CBN) Mr. Godwin Emefiele, who spoke in the documentary explained that with the coming of the refinery, Nigeria would save a lot of its foreign exchange that’s currently being used in importing refined products.

He said: “Ordinarily, setting up a 650, 000 barrels per day refinery, is usually a project that is set up by sovereign countries, not by individuals, no matter how big you are, no matter how big the company is.

“Our own selfish interest is that this will help to achieve our import substitution objectives and on this, you’re talking about goods that are currently being imported into the country with scarce foreign exchange, that we will now begin to produce them locally, thereby saving foreign exchange that the central bank would have spent importing or funding the importation of these items.

“At every opportunity that I have visited that project site, I get encouraged and I seize the opportunity of those visits to encourage even other Nigerians or other businesses, whether local or foreign, that Nigeria has a lot of potentials and as long as people can contemplate this kind of projects, they will receive the needed support from the CBN for the importation of plants and equipment.”

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Fuel Scarcity: Petrol Sells N220 Per Litre in Nsukka

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Premium Motor Spirit, otherwise called petrol, now sells for between N200 and N220 per liter at the independent marketers’ service stations in Nsukka, Enugu State.

The News Agency of Nigeria is reporting the hike in the price against the official pump price of N162 per liter.

It said it started about a fortnight ago due to the scarcity of the commodity in the town and its environs.

Some residents of the town expressed deep worry over the development in separate interviews with NAN on Wednesday.

A civil servant, Stephen Ozioko, said the situation had further compounded the economic difficulties in the area.

Ozioko said many private car owners had been compelled to park their vehicles at home and move around in public transport.

He said: “Since the scarcity started, I decided to park my car and take public transport to the office and back home. N220 per liter is exorbitant and I cannot afford it considering my salary as a civil servant. I shall continue to use public transport until the situation returns to normal.”

A building material dealer, Timothy Ngwu, said the development had also led to an increase in transport fare in the area.

Ngwu said: “Some people now trek from Nsukka Old Park to Odenigbo Roundabout because of the 100 percent hike in fares from N50 to N100 by tricycle.

“Before now, transport fare from Nsukka to Enugu was N500, but transporters now charge between N800 and N1000.”

Also, a commuter bus driver, Victor Ogbonna, described the scarcity and hike in the price of petrol as “unfortunate and an ugly development”.

Ogbonna added: “Today, only a few filling stations are selling the commodity in Nsukka town, while others are shut.”

He alleged that some filling stations, which claimed to be out-of-stock, were selling to black marketers at night.

He said: “This is why black marketers have sprung up everywhere in the town, selling the commodity for about N300 per liter.”

NAN reports that virtually all the major marketers in the area have stopped the sale of petrol, claiming to be out-of-stock.

The people called on the government to urgently intervene in order to bring the situation under control and also put an end to its harsh economic effects on the messes.

NAN.

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DPR Targets N3.2T Revenue by Year-End

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Nigeria’s Department of Petroleum Resources (DPR) will hit the N3.2 trillion revenue target by December 2021, according to its Director/ Chief Executive Officer, Mr Sarki Auwalu.

Auwalu made the disclosure when he led a delegation of the DPR management team to the Executive Secretary of Petroleum Technology Development Fund (PTDF), Mr Bello Gusau, in Abuja on Wednesday.

He said that 70 percent of the revenue projection had already been met. “Last year, we exceed our revenue budget. We were given N1.5 trillion but we were able to generate N2.7trillion.

“This year, our revenue budget was N3.2 trillion. By the end of August 2021, we have generated up to 70 per cent.

“So, we with September, October, November and December, it is only the 30 per cent that we will work over,’’ he said

He noted that the government took advantage of fiscal terms within the old and new legislation, thereby creating a level of increased signature bonuses.

“We reorganise the work programme that is normally being done in the DPR to key into the new operational structure as we see it in the bill, now an act.

“That programme is being handled by the planning and strategic business unit as against what we use to have because the entire work programme is supposed to show not only technical but also commercial and viability of oil fields and to guarantee the return on investment for investors.

“We have also created an economic value and benchmarking unit to key into the new fiscal provisions of the PIA,’’ he said.

Commenting on capacity, Auwalu said the country stands at the advantage of exporting skills to emerging oil and gas countries across Africa with proper implementation of the newly passed Petroleum Industry Act.

This, he said, the DPR was ready to partner with the Fund to continue to build capacity in the oil and gas sector

He noted that the Federal Government was determined to create leeway that would encourage investors and drastically improve the nation’s petroleum industry.

He further noted that no fewer than 300 legal battles in the oil and gas industry in Nigeria, which had been stalled for the past 20 years in courts, had been resolved through alternative dispute resolution.

According to Auwalu, the DPR is strategising well to ensure effective implementation of the PIA.

Responding, Gusau commended the DPR for enabling the industry and enhancing business activities in the oil and gas sector.

He said that DPR remained the head of the oil and gas industry in Nigeria adding that the Fund was grateful to benefit from the wealth of ideas from DPR.

“The last time we visited, we had a good discussion and issues raised are being implemented like tracking the inflow of funds in signature bonus accounts.

“We extended the meeting and involved ministry of Finance, Accountant General office and even the Central Bank of Nigeria (CBN).

“Sitting at field development plans and attending significant meetings, helped us to know where and what the industry is trying to do and it also helps to inform our decisions in training and capacity plans,’’ he said

He urged the DPR to continue on its effort to ensure an efficient and productive petroleum industry in Nigeria

He assured collaboration with all as the head of the implementation committee of the Petroleum Industry Act. (NAN)

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Lagos Signs MoU With Energy Firms On Power Supply

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Lagos State Government, through its Ministry of Energy and Mineral Resources, on Tuesday signed a Memoranda of Agreement (MOA) with Ikeja Electric and Sahara Power Group to increase power supply and provide uninterrupted power to residents of the State.

The agreement between Lagos State Government and the energy firms signed will also include the distribution of free prepaid meters to low-income areas, with the pilot phase of 20,000 meters to be distributed in the Alimosho Local Government Area of the State.

Speaking during the signing of the agreement at the Lagos State Secretariat, Alausa, the Commissioner for Energy and Mineral Resources, Mr. Olalere Odusote, said the aim of the agreement is to increase power supply to at least 22 hours daily, from about eight to 12 hours daily.

The Commissioner said the implementation would start immediately, adding that Lagos State Government has identified a number of feeders that can provide power in 20,000 low-income areas with plans to replicate the initiative across the state.

He said: “This Memoranda of Agreement is to ensure the provision of uninterrupted power to residents, especially the low-income areas. It is also part of efforts to solve the problem of metering and infrastructure deficit to ensure these areas get power supply which is also measurable.

“The 20,000 meters have been procured by the state government and would be distributed free to low-income areas in Alimosho Local Government Area as the pilot phase. Our intention is to replicate this gesture in other areas of the state once the pilot phase is successfully executed.

“We have identified a number of feeders that can provide power in these communities and implementation would start immediately.”

Also speaking, the Managing Director of Ikeja Electricity Distribution Company (IKEDC), Folake Soetan expressed the firm’s readiness to support Lagos State Government in ensuring uninterrupted power supply to residents of the State.

In his address, the Managing Director of Sahara Power Group, Anthony Youdeowei, said his company will be transparent in its dealings with the Lagos State Government and Ikeja Electric to provide power supply for Lagosians.

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