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Analysts at Chapel Hill Denham say domestic oil revenue can grow three-fold if the government sells domestic crude oil to Dangote refinery instead of Direct Sale and Direct Purchase scheme (DSDP).
Under the Direct Sale and Direct Purchase scheme (“DSDP”), the NNPC reported total revenue of N2.40tn from the sale of the 19.9bn litres of white products in 2021, which translates to 54.5mn litres per day on average.
“With the preceding in mind, we believe that the FGN can triple its naira earnings from the sale of the entire 445kb/d domestic crude obligation instead of exchanging for white products through the DSDP scheme,” said analysts at Chapel Hill Denham.
Dangote Refinery will be the largest refinery in Africa upon completion in 2023.
The coming onboard of the asset is also expected to help the government save money it spends on subsidy payment in a country beset by a huge infrastructure deficit.
Analysis shows Dangote Refinery will has the capacity to process 650,000 per day, and that compares with Skirda Refinery Algeria’s, 365,500; Nigeria’s Port-Harcourt Refinery, 210,000; South Africa’s Sapref Refinery, 180,000; Egypt’s Alexandria Midor Refinery, Egypt’s Cairo Mostorod Refinery, 142,000; Egypt’s El Nasr Refinery, 132,000; Nigeria’s Warri Refinery, 125,000; Libya’s Zawiyah Refinery; Egypt’s Alexandria El Mex Refinery, 117,000, and Egypt’s Astron Energy Cape Town Refinery.
At 66mn litres of PMS production per day installed capacity and multiple tanks that can hold 120mn litres of liquid, Dangote refinery can supply the domestic market and export the balance.
On the other hand, there are concerns that Dangote Refinery may not be able to sell its product at the current price, and experts blame a subsidy regime and lack of transformation policy for incessant fuel scarcity that most times paralyses business activities across the country.
The independent petroleum marketers say a price hike is inevitable, and that is the only way they can remain in business.
“The current pump price is no longer sustainable and we have made this known to the government. However, we must acknowledge the efforts of the Nigerian National Petroleum Company Limited in ensuring product availability,” said Zarma Mustapha, Deputy National President, Independent Petroleum Marketers Association of Nigeria,