Maximizing the potential of Dangote Refinery

Most patriotic Nigerians are in shock over the several hurdles placed on the path of the $20billion Dangote Refinery by the regulator and vested interests including the International Oil Companies, IOCs, apparently united by a common passion to frustrate the project and possibly stop it from attaining the full potential of meeting the country’s petroleum products demand and export overseas for the much sought foreign exchange.

We are deeply worried by this seeming gang up against a leading indigenous company and a business mogul, who had invested trillions of naira in the oil and gas sector where the federal government failed woefully due to ineptitude and endemic corruption, after almost seven decades since crude oil was first struck at Oloibiri in present Bayelsa state in 1956. It’s also a troubling time when none of the nation’s refineries is functional, despite guzzling billions of dollars in turn around maintenance since the return to democratic government and without anyone held to account.

This intended sabotage, in our view, is not only disgusting and totally unacceptable, but against the national interest and antithetical to government’s economic objectives of accelerated industrialization, backward integration, employment generation, boosting the gross domestic product and strengthening the national currency that had experienced its worst devaluation since Nigeria attained independence in October 1960.

Name them cabals, stakeholders or dealers of refined products, these band of unpatriotic elements should not be allowed to hold sway or have their way in their evil intent of frustrating the Dangote Refinery which Nigerians expect will alleviate their long suffering through products availability, affordable prices as well as change the retrogressive trajectory in the sector that had been characterized by moribund public refineries; unlike other major oil producers like Saudi Arabia and Algeria; endless scarcity of petroleum products which consumers source at exorbitant prices.

Recall that officials of the Dangote Group recently raised the alarm to the effect that IOCs are hampering the refinery by either refusing to sell crude or charging up to $4 above the standard price per barrel and accused the Nigerian Midstream and Downstream Petroleum  Regulatory Authority NMDPRA of deliberately issuing licenses to individuals to  import contaminated fuel.

Regrettably, rather than order a thorough investigation, the regulator swiftly denied it and went further to disparage the company declaring that Dangote diesel was far inferior when compared to imported one due to what he described as high sulphur content.

The NMDPRA Chief Executive, Farouk Ahmed, who for many years had worked very closely with petrol importers as the boss of Pipelines Products and Marketing Company, PPMC, before becoming a regulator,

also stated that the country would not for any reason, stop fuel importation to avoid a supposedly monopoly by the Dangote Group without addressing the accusation against IOCs decisively in line with extant provisions of Petroleum Industry Act, PIA on supply of crude to domestic refiners.

Specifically, we note with concern that section 109 of the PIA, 2021 which provides for the mandatory domestic supply of crude to local refineries on a ‘willing buyer, willing seller basis’ had not, from all indications  been fully complied with by the IOCs which perhaps informed the recent decision by the Federal Executive Council, FEC directing the Nigerian National Petroleum Company Ltd, to sell crude to  Dangote Refinery and other domestic refiners in naira instead of dollar.

Besides, the adopted proposal, which is yet to be implemented till date, is expected “to ensure the stability of the pump price of refined fuel and the dollar-naira exchange rate” while  the FEC presided over by the president specifically approved that the 450,000 barrels meant for domestic consumption daily, be supplied to Nigerian refineries, using the Dangote Refinery as pilot even as the Council further directed that the exchange rate will be fixed for the duration of the transaction, according to Bayo Onanuga, one of the presidential spokespersons.

It’s worth noting however, that the deal expected to eliminate mandatory international letter of credit and further save the country of dollar payments, is insignificant considering that the NNPC Ltd has committed to supply only four to Dangote Refinery which at the moment requires 15 cargoes of crude, at a whopping cost of $13.5 billion annually. The Africa Export -Import Bank (Afreximbank) and other settlement banks in Nigeria will facilitate the trade between Dangote and the company.

We strongly believe that Nigeria cannot afford to allow any individual, group of persons or IOCs to sabotage the Dangote Refinery described as the largest single train refinery in the world with installed capacity of 650,000 barrels per day, bpd, to avert looming economic disaster following recent disclosure by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, that the country currently spends $600million on fuel importation monthly blaming the  high import bill on neighbouring countries, up to Central Africa, that benefit from the nation’s fuel imports notwithstanding the heavy presence of security operatives at the borders.

Significantly too, the Refinery designed to handle the crude from many of the African countries, the Middle East and the United States while its petrochemical plant will produce 77 different high-performance grades of polypropylene, a major raw material for numerous industries and other refineries. According to Alhaji Aliko Dangote, President of Dangote Group, the products from the company would easily meet 100 per cent the needs of Nigeria’s demand for gasoline, diesel, petrol and Aviation Jet fuel with 56 per cent surplus for export, from which the company projects to earn  $25billion  per annum from 2025.

It is also worrisome that despite claim of petrol subsidy removal, government had hinted that fuel subsidy is projected to hit N5.4 trillion by the end of 2024. “At current rates, expenditure on fuel subsidy is projected to reach N5.4 trn by the end of 2024. This compares unfavourably with N3.6trn in 2023 and N2.0 trn in 2022”, stated a draft copy report of the Accelerated Stabilization and Advancement Plan (ASAP) presented to Tinubu by Edun.

The continued subsidy payment has taken many by surprise especially against the backdrop of the President’s inaugural speech on 29 May 2023, when he announced the removal of the subsidy as part of measures to reduce the cost of governance. Sadly, that announcement has caused severe hardship for many Nigerians following its attendant increase in the prices of goods and services amidst dwindling purchasing power and an inflation rate of 34.19 percent in June this year.

Therefore, it is imperative for the current administration to learn from the pitfalls of the past governments since 1999, which neither built new refinery nor made the existing ones functional but wholly relied on the importation of petroleum products before the intervention of Africa’s top industrialist, Aliko, who braced all odds to invest massively in the corruption-infested oil and gas industry after his Group led other investors to attain self-sufficiency in cement production in Nigeria.

We particularly counsel Tinubu, who like his immediate predecessor in office, Muhammadu Buhari doubles as the Minister of Petroleum Resources not to toe the infamous path of the former, who for eight years, despite electioneering promises, failed to fix the nation’s refineries and did not ensure prompt completion of turn around maintenance of the Kaduna and Port Harcourt refineries for the benefit of citizens.

In addition, he should ensure full compliance with the FEC recent directive regarding the mandatory sale of crude to Dangote Refinery and other upcoming local refineries in naira. A government that had been wooing and begging international investors to come and invest in Nigeria should give robust support and maximum protection to such national asset as the Dangote Refinery expected to boost job creation, economic growth, generate foreign exchange and enhance the GDP and not allow any cabal or vested interests to frustrate the monumental project.

For a better society

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