Dangote Refinery stalls as NMDPRA raises concerns over completion, licensing, and product quality

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Nigeria’s highly anticipated Dangote Refinery faces a setback, with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) casting doubt on its completion and operational status.

Farouk Ahmed, Chief Executive Officer of NMDPRA, revealed that the refinery is only at 45% completion and has not yet been granted a license.

“Well, just like you rightly asked, there are lots of concerns about the supply of petroleum products nationwide and the claims by some media houses that we were trying to scuttle Dangote refinery; that is not so,” he said.

“Dangote refinery is still in the pre-commissioning stage. It has not been licensed yet. We have not licensed them yet.

“I think they are at about 45 percent completion. So we can not rely heavily on one refinery to feed the nation because Dangote is requesting that we should suspend or stop all importation of petroleum products, especially automotive gas oil (AGO) or jet kero and direct all marketers to the refinery.”

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This contradicts recent statements from Dangote Industries, which claimed the refinery had begun production of diesel and aviation fuel in January 2024.

The NMDPRA’s comments raise several key questions:

• Completion Status: A significant discrepancy exists between Dangote’s claims and the NMDPRA’s assessment. Independent verification of the refinery’s progress is crucial.
• Licensing Delays: The lack of a license casts doubt on the legality of any production currently happening at the Dangote Refinery. NMDPRA clarification on licensing requirements and the timeline for approval is necessary.
• Product Quality Concerns: The NMDPRA further highlighted concerns over the quality of Dangote’s diesel, stating it does not meet the West African standard for sulfur content. This raises questions about the suitability of the refinery’s output for the Nigerian market.

Dangote’s Response and Market Implications:

Dangote Industries has yet to respond publicly to the NMDPRA’s statements. Their previous request for a suspension of crude oil imports to other refineries, in favor of exclusive supply to Dangote Refinery, has also been rejected by the NMDPRA due to concerns over market monopoly.

These developments cast a shadow over the projected impact of the Dangote Refinery. Delays in completion and licensing, coupled with product quality issues, could significantly impact its ability to meet initial production targets and contribute meaningfully to Nigeria’s domestic fuel needs.

The uncertainty surrounding the Dangote Refinery creates a volatile situation for the Nigerian fuel market. Investors and consumers alike are left wondering about the refinery’s actual contribution and potential impact on fuel prices.

Moving forward, greater transparency is essential. Independent verification of the refinery’s completion status, clarification on the licensing process, and a frank assessment of product quality are all necessary. These steps will help to stabilize the market and ensure realistic expectations for the Dangote Refinery’s role in Nigeria’s energy future.

Tags: Dangote Refinery, Nigeria, NNPCL, Mele Kyari, Farouk Ahmed, Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, Bola Tinubu