The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has called on the Federal Government to significantly increase its stake in the Dangote Petroleum Refinery.
The association proposes raising the government’s shareholding from the current seven percent to at least 45 percent.
PENGASSAN President, Festus Osifo, made this recommendation in Lagos on Tuesday during the presentation of the communique from the association’s recent Energy and Labour Summit.
He argued that a larger government stake in the refinery would enhance energy security for Nigerian citizens. He emphasized that energy security is crucial for the survival of any nation, and Nigeria is no exception. The public demands affordable, accessible, and reliable energy supplies.
Osifo further mentioned that the government should partner with players in the private sector to maintain the already available petroleum product storage in the six geopolitical zones in the country.
“When operational, petroleum products will be stored there and only made available when there is a shortage in supply. This will help in eliminating the bad roads and severe erosion-imposed perennial shortages that often lead to queues at petrol stations across the country,” he said.
Osifo emphasised the expansion of pipelines that could be used in the delivery of refined petroleum products across the length and breadth of the country to reduce the pressure on roads by trucks carrying these products.
He pointed out that to achieve energy security, energy must be affordable, hence in ensuring affordability, the Government must do all it can to stabilise the exchange rate as the continuous slide of the Naira will greatly hamper the affordability of energy in Nigeria.
In ensuring local production of petroleum products, he urged the federal government to ramp up efforts to make the Nation’s four refineries work.
He stressed that once operational, the government should divest majority shareholdings and own at most 49 percent of the shareholding in the four refineries, noting that core investors will be brought in to take the 51 percent stake.
He regretted that the NNPC could only buy a 7.2 percent stake in the $20bn refinery.
“Dangote is open to conversations on selling the stake. He was ready to sell 20 per cent earlier and we were also pushing for the government through NNPC to get the 20 per cent, but unfortunately they could only afford seven percent, “ he said.
Osifo said the devaluation of the naira is the major reason why PMS has become unaffordable for Nigerians, noting no government floats its currency above 100 percent.
“If, for example, our exchange rate was at N450 to a dollar, PMS would be selling for around N320 or N350 per litre. So, the main issue wasn’t the removal of subsidies. The main issue was that devaluation. The real problem is devaluation,” he stated.
The association called on the government to develop and strengthen the country’s oil and gas value chain to ensure a more efficient and reliable distribution system downstream.
PENGASSAN stressed that without such a system, the country would continue to face recurring fuel shortages as its reliance on a truck-based distribution system is deficient and inadequate to meet the demands of Nigerians given its vulnerability and disruptions due to bad roads, flooding and ad-hoc logistics arrangements.
The association mentioned that the recent trend of divestment by the International Oil Companies necessitated a strategic shift to accommodate local empowerment, innovation and harnessing potential and latent talents, adding that the divestment trend was driven by the combination of global energy transition goals, financial prudence, portfolio rationalization and evolving regulatory environment.
PENGASSAN cautioned that divestments present both risks and opportunities for Nigeria, including a reduction in foreign direct investment, technical expertise and a potential dip in production level.
“A comprehensive divestment framework under the Petroleum Industry Act (PIA) to guide asset divestment by Licensees and Lessees in the Nigerian Upstream Petroleum Sector should be strictly adhered to and implemented. Pending when the Petroleum Industry Act is amended to include the divestment framework, the current framework promulgated by the Nigerian Upstream Petroleum Regulatory Commission must be gazetted for full implementation.
“A job protection system should be developed by the government to ensure that Nigerians do not lose their jobs post divestment. An MOU must be signed between the divesting companies and the trade unions to protect members’ jobs and enhance their welfare,” he said.
