President of the Petroleum Products Retail Outlets Owners Association, PETROAN, Billy Gillis-Harry in this exclusive interview with NewsNow correspondent, Ariemu Ogaga explains that Nigerians should trend with caution over Dangote Refinery and its fuel price regime in the coming months to avoid cannibalization of small businesses in the oil & gas sector. He also lays bare issues affecting the sector vis-a-vis the Nigerian economy.
Excerpts!
Aliko Dangote projected that by mid-July (Now August), his refinery will come on board. What would that be for stakeholders and Nigerians?
Well, we want Dangote refinery to start producing on all four valves. All valves should be open and wide. However, there’s a need to be cautious about the development of the business. 650,000 barrels of crude oil and we’re very proud. As a Nigerian, I’m very proud. But I just hope that his pride will not keep me hungry without being in business.
Because right now, we’re doing our little businesses from importation. We’re doing it. To my knowledge, nobody has brought substandard products except when there was a general product of PMS that came in that of course explanations were given. To my knowledge, none of my members have come to say, Oh, we bought PMS as a company and the rating is low. Of course with our 3P’s solution, we also take measures on the product.
Believe me, I will not be able to say either yes or no but I think that such a broad-based allegation by Dangote Refinery should be backed with empirical evidence. It shouldn’t be just a one-off allegation because people are importing products. These products are going to be used like Shell and AGIP and different stakeholders in the industry that are using it to be able to further produce crude oil. So I mean, if there is a presentation like that, we should expect the houses also to come out and tell us the whole part of the story. And then of course Depots and Petroleum Products Marketers Association of Nigeria, DAPPMAN responded by saying oh, sorry, our members are not bringing it.
I will also stand to say that PETROAN members have not imported any dirty diesel. For PMS we’re not bringing it because it is regulated. Nobody is going to bring PMS today, land at close to N1000, sell for five hundred and something. So that’s not just going to be possible. You know, so the government must do their social engineering to work out that type of economic activity, which only then we’ll understand, because they’re not discussing that with us in the public. So we are not going to know as to what is the size of the subsidy, the recovery or the assistance. It seems we do not even want to call it a subsidy, but that’s what it is.
I keep explaining this. If we bought products from NNPCL, we are duty-bound to sell them within N626, N650 bandwidth. But if we source for products from the first tier, second tier, four tier rule, by the time the product lands, you cannot genuinely expect that the product will be sold for less than N700 or even a little bit above. And of course, there are places where the products were selling much higher. Because what accounts for that is the logistics. To land the products in the filling station. But in petrol, because of our disciplined approach to the industry, we try to make sure that we have empirical evidence. When to buy the product, what is the cost of your landing? So we too can be able to stand to defend you or to also castigate you.
Because if you’re doing something that’s completely taking undue advantage of the Nigerian public, we must report you and be able to get solutions to that so you don’t do that in the future. So that’s why we insist that NNPCL should always give us access to products because when they give us products, then we can within ourselves self-regulate and make sure that none of our members who bought products from the NNPCL will sell above the price that is already there.
What are the implications for Nigeria if Dangote Refinery becomes a refiner of fuel?
Well, I do think that the Dangote refinery has invested so many billions of dollars there. But those profits cannot come over just overnight. So it must be a planned process to gradually do cost recovery benefits and all of this. So don’t forget that it is a private business, even though the government through NNPC has now got a share on our behalf. We all have a share in Dangote but at the end of the day, we need to call for caution in the pricing regime.
Again, we advise Dangote to also have stakeholders’ meetings consistently to be able to review what the industry is saying. So that it doesn’t put the price as if it’s going to be a monopoly. We’ll have to be very careful about that. Because we need all the segments of the industry to be active, even those who have just one filling station are using that to feed families. So we do not want that segment of the economy to be whittled out or whittled down completely.
We want a situation where Dangote will consistently work with the rules, let him refine and then let the depots distribute and let the retailers take from the depots and give to the end users. In that way, there’s a value chain that’s created that keeps everybody in business because, in an active economy, it’s not enough that I have money. It is so much that I brought maybe N10,000 Naira to you to pay for service and they used to pay for another service that I use. And then it goes round until it comes back to me and then it comes in. So wealth is distributed only by very effective economic activity. And in this industry in the downstream, that’s how it has been that many people today have gone to school without worrying about government scholarships for them to be able to do their little things and it’s consistent because there’s one business that you cannot run a loss and you cannot say you’ve kept the product and got nothing. So we want to encourage Dangote to be a refiner and stay a refiner, not a marketer.
What are you anticipating in terms of pricing with the planned commencement of fuel supply by Dangote Refinery?
The products should be available and the price should also be affordable. That’s why we say that there’s a need for domestic value or domestic revaluation of the oil and gas industry with the emergence of the Dangote Refinery. The reason is, now why should Dangote buy crude oil in US dollars? We are not printing US dollars in Nigeria. So even though oil is dominated as an international commodity that is predicated on the US dollar, part of the emergency decisions that I should expect to happen is that we are going to produce 2 million barrels of crude oil strictly for our domestic consumption, and we’re going to price it at the Nigerian Naira.
Of course. That’s why sometimes I bother to ask. How did it get so bad that Dangote Refinery had to import crude oil? Because they will not have told him about the Bonny light because they’re also producing oil there. But they are importing from other countries and storing up. So we need to register the entire system and be transparently honest because for crying out loud, being the poorest man or the richest man in the world, we’re all equal. We are leveled by birth and death. Nobody is superior. This is not philosophizing, but it’s real because regardless of the height at which you go, we have histories of people who have become super wealthy in the world. And then today you go back and see where people who are calling the shots of how their economy runs and this world most of them died paupers.
So there is a level that should make us know that the happier we make our communities, the longer our lives should be, and the longer we’ll enjoy life. I’m not a socialist. I’m a capitalist, but my type of capitalism is based also on the social environment because you cannot be a capitalist without keeping your social environment stable. So, this is what I think that we should bring to the industry, to declare an emergency on the crude oil and come up with answers to put what we need to do differently. Let the state of emergency be clearly defined as rejigging the domestic consumption and production parameters. We have Nigerians who are experts all over the world in different things, including the best ways of refining crude oil or even producing crude oil. So we need to get back to that.
What’s your position on the deadlines and missed deadlines at the Port Harcourt, Kaduna and Warri refineries?
“My position is that we should be guided with enough technological information and chart how we should be able to get it correctly. When we say we are going to have one refinery up and running on December 31st, we should be able to get that work. And if we’re not able to do that, and we keep shifting the mark, it’s a problem and we should encourage our government to look into that because its integrity is at stake here now. So those refineries should be up and running. And our stake is that we encourage the government to do more and ensure that those refineries are up and running. It is difficult for anybody to say refining work is going on there. It’s not the best thing for our reputation as a country or even a reputation for those who are the leaders and authorities in this sector.
What should the government do to boost crude oil production and the Nigerian Economy?
Well, the reality is that we were not depending on crude oil in 1960. And yet we became a very strong nation. By 1977, we’re still buying the US dollar for less than 75 kobo. So there must be something we were doing right that time that we need to get back to, and that thing that was right was we were focused on agricultural exports and production. So we need to get back there. Crude oil is a quick fix. But as a quick fix, it also whittles away.
So we need to get back to our grand pillars. We need to get back to our cocoa. We’re having cashew nuts. We’re having pumpkins, we’re having mineral resources, gold and different things. We are just having all those things wasted and not effectively monitored or principled. So we need to principal them properly and get additional sources of income to boost our reserves.
Fuel queues have been a reoccurrence decimal in Nigeria, What do you think are direct solutions to address the challenges?
Well, straight away we’ve been talking about the challenges facing the industry, especially in Abuja and Lagos. It’s a situation that has come up and is creeping on us as usual, without clear knowledge of what’s going to happen, and solutions you know to it. So what we expect and advice is simple. We need to create a war council and we can make these meetings physically or virtually, at least two in a month.
The problem is supply. Once there is a supply glitch, it will affect everything. So that supply must be projected and there should be a solution to that. If there’s going to be a shipment or shipments challenge, what we should do is to proffer solutions and ideas to mitigate that. So it does not happen but the fact that it has happened, it has happened. It has crept on us and it’s extremely important for us, as we want our economy to grow, to look into that situation and proffer solutions.
So for us, our solution is simple. For me, I will look at it as any time there is a fuel queue, it’s a war situation. People are fighting and quarreling. So we must have a council to be able to defend the process. So what are these differences? It’s supposed to be provisioned, planned and efficiently executed. So when you do that, do it with those who are at the grassroots for instance, petrol is the last most critical mile because we are the ones who are handling instances or dispensing directly from a retail outlet and so we must have an idea of how we should make sure petroleum is in retail outlets.
Well, it will go a long way to solve problems because then everybody will be working with data. Everybody will be working with knowledge. Everybody will be working with a process to say something is about to happen because everybody will have it. And then we certainly should now depend on the solution of petrol. Our petroleum passports solution should be integrated now into the system.
Our 3P’s sales solution is also very efficient because it will stop any kind of petroleum products modeling. So we advocate for that, that we hope that at some point, the leadership in the country will see the wisdom of applying that technology. It is homegrown. It is not imported from any country. It is homegrown in Nigeria
What the 3P’s are supposed to do is to track when a product comes into the country. When it is delivered to a depot. When it’s delivered to the tankers in the depot and to which location it goes. Now when that is done, you also need to track when the product is being dispersed into cars, into trucks, whether it’s the PMS or its gas; it is a broad-based solution that can help us to be able to monitor what we’re doing. So clearly, if our importers bring in say 100,000 metric tons of Premium Motor Spirit we should know where it went to. We should know who used it and who we are actualizing.
And then we have the 3P’s sales solution, which is a very efficient, locally developed technology. That is electromagnetic and you cannot intrude into any of our storage facilities, whether it is stationary or mobile. So in vehicles, you cannot just keep taking products out away for testing and all of that which causes shortages can become difficult to be able to account for by both the drivers and the managers. So with the three 3P’s solution and the three 3P’s sales solution, we have an answer and it’s locally grown, it’s not expensive.
PETROAN also is working with those who’ll be given refinery licenses that did not have capacity and partnership. We are familiar with the partnership with them. Because we have enough retail outlets to be able to obtain from them enough partnership and guarantee for them to further raise capital to be able to do the work.
So at the end of the day, all of them are not going to be fighting to keep the market share alive, and we’re ready to give Dangote the support just like we give to the modular refinery. There are a lot and there are refineries. The BUA Refinery is also coming up. Our support is always available just like we give to even the government refinery in Port-Harcourt. All of us are contributing to the growth of the sector
How would you react to the former CBN governor, Lamido Sanusi’s (Now 16th Emir of Kano Emirate) statement on auditing the Nigerian National Petroleum Company Limited, NNPCL?
I don’t have any reason why they should not audit anybody at all. The government should have the political will and the sagacity to audit every and anything that needs to be audited so that we can exactly know what our country is all about. If you set a deadline of nine months to audit every sector of this country, you will get answers. You’ll get to know the method.
Just look at somebody who said that she was feeding tens of millions of children and spent so much money within a period. Now she’s bringing the money back because somebody has woken up to say, no we need to find out what is going on. Now she’s been told to go and bring the list with which she did. That is part of auditing. And at the end of the day, it is going to bring the results. All those are sitting down because what did they do with the money? They just changed them to dollars and sat down in one bank account doing nothing. And any day they die, that money is lost because there are no records. The bankers in Switzerland, England or America will now be eating fat on it. Every segment of Nigeria should be audited.
Well, you will not only hold NNPCL accountable. You have to hold the Central Bank more accountable than even the NNPCL because the NNPCL will not do anything about monetary policies or monetary movements without the Central Bank being part of it. So we need to get back. Even Sanusi himself has to come back and give an account of what he did as Central Bank governor. So I like his solution, but let him show the work. Let every part of Nigeria come out because let me tell you my concern. My concern is all these monies are being frittered away and not even used to build factories or buildings in the countries rather they are running to Dubai to buy flats, not even houses. Not even lands. Flats! It’s so disgraceful. You know, so anybody who loves this country should support that every segment of Nigeria should be audited. And in the audit, there should be no sacred cows. Every fact should be laid bare and then we’ll get answers to make sure that we put what we need to do working.
What’s the way forward to the challenges of the petroleum sector?
The way forward as far as petrol is concerned is to look at existing solutions and take those solutions and put them against our Petroleum Industry Act and activate those processes. We cannot be an oil and gas-endowed country without having homegrown technology from grown knowledge of how to tap our resources, how to process them, how to transport them, and how to work on them to be able to turn them into usable local domestic needs like PMS, like gas, and all the derivatives of crude oil.
Now we are depending on foreign technology, which is not a bad idea because nobody wants to go and reinvent the will. But this foreign technology should not be transferred. Our Nigerian youths and women should be taking this technology and domesticating it because there will be issues that would not strictly apply or bring solutions, you must domesticate because this is Nigeria. Certain things will not be answered in the press in America, England, China or somewhere else. So for me, that’s a very critical point, the transfer of technology.
Two- Detailed operational modalities, to stop our multinational partners from being the ones that take our oil. Tell us what they sold. And then we just take a report from them. We need to be in charge of the daily details of our resources. Now thereafter, we need to also look at what are the income projections that we’re making, that we can put back into the industry to stabilize it countrywide because it’s country first.
Regardless of what we want to do, if Nigeria is not stable, there is nothing you can do. If the economy of Nigeria is not stable, there is nothing you can do about it. And all of this in the oil industry is what is galvanizing either the stability or instability of our naira mostly because we’re dependent on crude oil and maybe some gas, for our foreign exchange needs.
Further than that, we are importing almost everything. So that needs to be very drastically reduced to the barest minimum. Now, thereafter, we should all as Nigerians be patriotic enough to know that we do not need to be corrupt to the extent of denying three generations ahead of us. The potential is what is happening, because when you look at why are we not having crude oil, why are we not having this and that and we know this is an oil and gas producing country, so what’s wrong?
I’m happy that the Group Chief Executive Officer of NNPCL has declared a state of emergency. Well, it doesn’t matter what is ahead of the minister. It is his business. He is the CEO of the business. The minister is supervising. The Minister of State is supervising. So, he is the manager. He should know exactly the reason an emergency should be declared, especially when you have the likes of Dangote Refinery, but we don’t have crude oil. We are being sabotaged. And all of those kinds of things. So it’s important that modular refineries are operating and producing some level of gas oil. Different intermediary products are also complaining that they don’t have access to crude oil.
So, there’ll be nothing wrong for NNPCL to declare and also call their partners and say sorry, we’re not going to do business as usual. Because that’s what for me the state of emergency means. State of emergency means that yesterday we used to spend so much money, we needed to reduce. It means that we are producing 2 million barrels of crude oil that is given to our auto pilot but we need to be able to increase our production for strictly domestic consumption. So we should be able to up our game to 4 million barrels a day.
There are so many things that a state of emergency could mean, so nobody should blame him at all for not waiting for the minister or the president who is the senior minister of petroleum to declare. So I want to say that he has started it right but I think we still have to go back through the process to be able to explain.