September 09, (THEWILL) – With the coming of Dangote Refinery on stream, oil industry player and Chief Executive Officer of CITA Group, Dr. Thomas Ogungbangbe, said aviation fuel, popularly known as Jet-A1, can now be produced in the country.
Speaking with THEWILL recently, Dr. Ogungbangbe pointed out that before this year, there was no refinery in Nigeria that could break or crack jet fuel.
Speaking on why Nigeria has not been able to produce jet fuel before now, Ogungbangbe said, “For you to be able to do jet fuel, the crude to be used must be hydro-processed. I am not saying modular refineries cannot do jet fuel. However, the cost of a hydro-processing chamber is more expensive than the cost of a modular refinery.
“At the end of the day, you find out that most modular refineries, especially the ones we have in Nigeria, do not have hydro-processing facilities. So they can’t make jet fuel. But if you have a modular refinery that can hydroprocess the crude oil, which means you have to fuse hydrogen iron into the crude at a very high pressure level before you now take it to the catalytic process of breaking it down to jet fuel.
“That is the reason why before this year, there was no refinery in Nigeria, whether modular or substantive, that can break or crack jet fuel except now that Dangote has come on board.”
The CITA Group boss, however, added that the rollout of petroleum products from the Dangote Refinery would not bring about price reduction but product availability.
He called for a full deregulation of the industry in a way that would bring in more players, saying it would deepen competition and ultimately enhance price reduction.
He said, “As I said, Dangote would only ensure availability, it does not translate to any magical price reduction because Dangote Refinery is a for-profit-venture and it is also logging to the protocols of other refineries in the world.
“So, it is not owned by the government and it is an individual who has set up a facility with the intention of filling the gaps and also making his own profit. So we should not expect any magic.”
On the controversy around pricing, he said, “What can happen if there is deregulation and subsidy is removed is that a litre of petrol will sell for as much as a dollar. So what it means is that the original price of petrol anywhere in the world, you can check the dashboard in the US or UK, it is also between 80 cent and one dollar anywhere in the world.
“So, as it is now with the present increment, Nigeria is still ranking as one of the cheapest in the world, which means the government is still paying a lot of subsidy. So if the subsidy is removed, I can tell you that there is nothing that would make petrol sell less than N1,500 a litre.
“If Dangote is going to sell a litre of petrol, he would most probably sell for maybe N1,200, N1,300 or N1,400 to be able to make his money back.
“Can people buy it? So the government is just using NNPC to come in the middle of arbitrage. So the government is just trying to save the pocket of the people by taking some of the heat. So that is the reason why it is only the NNPC that can buy PMS from Dangote because any other purchase or purchases would only be for exports.
“There is nobody that can go to Dangote and buy PMS at the price they would sell it and make a profit because you can’t buy something for N1,200 or N1,300 and sell it for N800.”
Ogungbangbe, who advocated for the complete deregulation and removal of subsidy, said what the government has been doing is “a measured approach”, which he stated would eventually result in total deregulation.
He added, “So, even as it is, the government is giving almost 50 per cent subsidy on PMS even at the present increment, the government is still taking heat. So it is only the government that can buy it, there is no other company that can buy it and make a profit.
“My advice for the government is to remove the subsidy completely because there is no way the government can survive at the going rate.”
On the protest that might trail the total subsidy removal, he said, “That is the reason why the government is taking a measured approach at doing it and it is making it scalable. So we should still expect more to come. And the truth of the matter is that if we are copying the Western world, go to London, go to America, do they not have crude oil too?
“So how much is crude oil being sold? So it is practically the same. Go to other African countries, Benin Republic is there, go to Zambia, go to Tanzania, go to South Africa, how much is it being sold? So we need to understand and appreciate that the government is doing enough.”
Anthony Awunor, is a business correspondent who holds a Bachelor of Arts Degree in Linguistics (UNILAG). He is also an alumnus of the Nigerian College of Aviation Technology (NCAT), Zaria Kaduna State. He lives in Lagos.
