NOGASA urges Dangote Refinery to reconsider plans on direct distribution of products

…Warns of potential scarcity, instability in oil and gas value chain

 

FAVOUR  ISHEMBER, Abuja

 

The Nigerian Oil and Gas Suppliers Association (NOGASA) has called on the Dangote Refinery to slow down its plans for direct distribution of petroleum products, warning that bypassing marketers could lead to widespread scarcity and instability in the industry.

NOGASA President, Bennett Korie, made this appeal during the association’s second Annual General Meeting, on Thursday, in Abuja.

Korie recalled NOGASA’s past support for the Dangote Refinery, including pleading with former President Muhammadu Buhari to intervene in securing $1 billion in funding and advocating for crude oil sales in naira.

He expressed concern that Dangote’s direct distribution plan might replicate the mistakes of the Nigerian National Petroleum Company (NNPC), which struggled after venturing into direct distribution through its filling stations.

The NOGASA president warned that if Dangote Refinery proceeds with direct distribution without consulting stakeholders, it may lead to Job losses. Up to 3,000 marketers’ workers could be laid off, leaving only 1,000 workers in the refinery, potentially including foreigners.

 Marketers’ closure could lead to scarcity, as Dangote’s solo distribution might not meet the demands of over 50,000 filling stations across Nigeria, which could also introduce Insecurity. Because bypassing communities that rely on product allocations for peace could lead to unrest.

Korie urged Dangote Refinery to engage with stakeholders, including NOGASA, IPMAN, PETROAN, NUPENG, and PTD, to discuss and advise on the direct distribution plan. He emphasized that marketers are capable of distributing products and that focusing on refining and selling to depot owners would allow Dangote to create stability both domestically and internationally.

“We also pleaded with the President to intervene on the issue of DSDP, so that crude oil could be sold in naira, particularly to Dangote Refinery. The President listened, and it was approved. Special thanks to President Muhammadu Buhari for that. The good news is that when our dear President Bola Ahmed Tinubu came on board, he implemented this fully. Today, we are enjoying crude oil in naira, and all charges are now paid in naira. There is no more DSDP.

“Today again, we plead with Mr. President to intervene by telling Dangote to slow down and go by the rules of the game. Nobody is against the refinery; in fact, no one has supported the Dangote Refinery more than NOGASA, 100%. But when this issue came up, we said, “No, we need to advise. We need to suggest how to go about it.”

“Even though we have never sat with him one-on-one and he has never invited us, we are not worried. What matters to us is that the refinery is blending, the product is coming out, and Nigerians are enjoying it. Some people may think we are opposed because of competition, but no — we simply do not want what happened to NNPC to happen to Dangote”

“Before now, NNPC refined products and distributed them through PPMC. Everything was moving smoothly until advisers told NNPC to start distributing directly through NNPC filling stations. Once that happened, the refinery started going down because they focused on their retail stations instead of refining. You cannot do it all, refining, blending, operating, and running filling stations. That is why they had problems”.

“We are saying to Dangote: don’t go there. Focus on refining and selling to marketers, who will then sell to end users. Remove direct distribution , it will bring you problems and distract you from running the refinery properly. If you focus on refining, you can also sell to other countries, creating stability both here and abroad. We marketers are capable of distributing. All you need to do is refine, sell to depot owners, and let us buy and distribute”.

Addressing Industry Challenges and Urging Cooperation, the NOGASA President highlighted the critical role it plays in the stability and development of Nigeria’s economy, emphasizing the importance of cooperation and dialogue in addressing industry challenges.

 Korie underscored the significance of the downstream sector, which generates over 70% of the country’s foreign exchange earnings

Korie expressed concerns about the potential impact of the Dangote Refinery’s plans to engage in direct distribution of petroleum products, warning that it could lead to job losses and undermine the livelihoods of small suppliers who depend on the business. He urged the refinery to consider the interests of small suppliers and work with NOGASA to ensure a mutually beneficial arrangement.

Call for Stakeholder Engagement

The NOGASA president emphasized the importance of stakeholder engagement and dialogue in resolving industry challenges, citing the need for cooperation to maintain a profitable and sustainable industry.He called on industry players to work together to promote quality service and protect the interests of all stakeholders.

Korie also highlighted the challenges facing the Nigerian economy, noting that the country’s economic ranking in Africa has slipped from first to fourth. He expressed hope that the oil and gas sector, with its significant contribution to the economy, could help Nigeria reclaim its position as a leading economy in Africa.

Korie reiterated NOGASA’s commitment to promoting the interests of its members and the broader industry, while emphasizing the importance of cooperation and dialogue in addressing the challenges facing the sector.

With the planned start date for direct distribution set for August 15, NOGASA is hopeful that Dangote will listen to their concerns and reconsider its plan. Korie expressed optimism that Dangote would understand NOGASA’s position and work with marketers to avoid scarcity and instability in the industry.

Addressing Challenges in Oil and Gas Industry,the House Committee on Petroleum Resources Downstream reaffirmed its commitment to supporting the growth and stability of Nigeria’s oil and gas industry.

Honourable Barista Ikenga-Imo Ogoechiri, Chairman of the Committee, emphasized the importance of collaboration between government institutions and private stakeholders to overcome challenges in the sector.

According to him, the industry faces several challenges, including Inefficiencies in distribution networks, Blockages and adulteration that compromise product quality and endanger machinery.

Frustrating supply chain disruptions leading to scarcity.Logistical hurdles, such as transporting products across Nigeria’s vast geography which pose significant challenges.

The Committee is closely monitoring the entry of new players into downstream distribution and marketing, particularly Dangote’s recent move. Ogoechiri assured that the National Assembly is working to create a win-win situation for all stakeholders, aligning with the principles of the Petroleum Industry Act (PIA).

The PIA provides a comprehensive framework for improving distribution systems, enhancing transparency, and ensuring product quality. The Act is a testament to the collective commitment to revitalizing the oil and gas sector.

“We are all actually aware of inefficiencies that sometimes block our distribution network and the primary issues, adulteration that compromises the quality and endanger the machineries, the frustrating supply bottlenecks that lead to scarcity, and the complex logistical hurdles inherent in transporting products across our vast geographical area”.

“These are not mere talking points. They are real challenges that impact the livelihood and the nation’s economy. I want to assure you that the National Assembly is not oblivious to these realities”

“We are particularly attentive to the recent entry of Dan Gotay into downstream distribution and marketing, and its potential impact on existing distributors. This is a significant development, and we want to assure you that we are meticulously looking into this situation. Our objective is to foster an environment that will bring about a win-win situation for all stakeholders, with full alignment with the principles enshrined in the Petroleum Industry Act PIA”.

Ogoechiri emphasized that government efforts alone are insufficient to drive sustainable growth and efficiency in the downstream sector. Robust collaboration and shared responsibility between government institutions and private stakeholders are crucial to dismantle existing barriers, foster a more competitive and equitable environment, deliver reliable and efficient petroleum product distribution, and ensure vital contribution to national developmental goals.

The National Assembly is committed to working with stakeholders to optimize challenges and unlock opportunities for growth in the oil and gas industry. Continued stakeholder engagement, open dialogue, and shared commitment to excellence are essential to prospering in the downstream sector.

The NOGASA meeting aimed to address issues affecting the industry and find solutions to ensure the best quality products at the cheapest price for Nigerians, key stakeholders, including the Nigerian Association of Energy Correspondents (DAPMAN), and the Armed Forces In attendance.

The stakeholders acknowledged that progress has been made in addressing industry challenges, but more work needs to be done.

The Armed Forces of Nigeria emphasized the importance of the oil and gas industry in ensuring energy security.

 They highlighted the need for stakeholders to remain resolute and address challenges proactively. The industry is expected to play a critical role in Nigeria’s economic development, and stakeholders are working together to achieve this goal.

The stakeholders also discussed emerging trends and opportunities in the industry, including:CNG distribution, which is the gradual shift from petrol to Compressed Natural Gas (CNG) and the need for more CNG stations.

Also among the key issues discussed are promoting the use of Liquefied Natural Gas (LNG) cooking gas to reduce deforestation and environmental degradation,  Improving safety in distribution systems and investing in critical infrastructure.

The stakeholders emphasized the importance of collaboration and support in addressing industry challenges. The Armed Forces of Nigeria expressed their commitment to protecting oil and gas infrastructure and supporting lead agencies in this effort.

The meeting concluded with a renewed commitment to working together to address industry challenges and unlock opportunities for growth and development.