The Dangote Refinery issue

FOLLOWING weeks of needless bickering between federal regulators and the multibillion-dollar Dangote Petroleum Refinery over the supply of crude oil, the Federal Government ostensibly moved to resolve the crisis last week. The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, convened a meeting with key stakeholders to address the issue. The meeting had in attendance the President of the Dangote Group, Alhaji Aliko Dangote;  the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed; the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, and the Chief Executive Officer of the Nigerian National Petroleum Corporation Limited (NNPCL), Mele Kyari. In a statement that caused considerable consternation in the polity, the Chairman of the Dangote Group, owners of the refinery, had alleged that a cabal was intent on sabotaging its operations. On its part, the NMDPRA alleged that the refinery was yet to be licensed and that its products had excess sulphur, claims that were hotly contested by the Dangote Group, which retorted that the refinery had been getting orders from around the world. But the NMDPRA did not stop there: it alleged that Dangote was insisting that petrol importation be stopped and all marketers directed to his refinery.  Dangote dismissed the claims.

Located in Ibeju-Lekki, Lagos, the refinery, the world’s largest, is a  650,000-barrels- per-day (bpd) crude oil facility that transforms crude oil into petroleum products such as diesel, gasoline, jet fuel, and kerosene. Designed to process a large variety of crudes, including African and Middle Eastern crudes, as well as the US light tight oil, the refinery maximizes gasoline, which is in high demand at 53 percent of the production capacity compared to 22 percent of the existing refineries in Nigeria; extracts maximum value from every barrel of crude, minimizes low-value fuel oil, and is estimated to be able to generate an annual market value of US $21 billion for Nigerian crude oil,  foreign exchange savings/earnings of US $9.9 billion, and over $25 billion addition to Nigeria’s GDP.

Other acclaimed benefits include its 435MW power plant being able to meet the total power requirements of the  Ibadan Distribution Company, which covers five states, and the fact that it is designed to produce 77 different high-performance grades of polypropylene. It has been said that the plant’s products will serve as raw materials for the production of polyvinyl chloride (pvc), which is used extensively across a broad range of industrial, technical and everyday applications, including in building, transport, packaging, electrical/electronic and healthcare applications. The Dangote Industries reportedly developed a port and constructed quays with a load-bearing capacity of 25 tonnes/ sq meters to bring over dimensional cargoes close to the site directly to handle liquid cargoes. The jetty, situated at a distance of 12.3 km from the refinery, reduces travel time. This is in addition to the refinery’s reported capacity for both land and sea evacuation to serve domestic and export markets, with its design said to conform to the World Bank, US EPA, EU and the Department Of Petroleum Resources (DPR) emission/effluent norms.

To be sure, we do not make light of regulatory issues. Regardless of the acclaimed state of the Dangote Refinery and the position of Aliko Dangote, Africa’s richest businessman, in the scheme of things, the law remains the law and ought to be enforced to the letter. The problem is that in this case, there has been no clarity on the actual offence(s) committed by the business in question. Instead, the country has been treated to grandstanding and obscure polemics. It is befuddling that a refinery launched with fanfare by the then President Muhammadu Buhari under the immediate past administration is said to be unlicensed. How then has it been operating and engaging in exports? If its products have an untenable sulphur content, why has this issue not been raised by its foreign customers to date?

It is a no-brainer that a facility such as the Dangote Refinery, Nigeria’s only functional refinery at the moment, ought not to be trashed by the Nigerian government, particularly given its rhetoric about recovering the Nigerian economy from the current morass. While we make absolutely no comment about the alleged political underpinnings of the dispute between the Dangote Group and the Federal Government, we are constrained by the lessons of the past to issue a serious warning over the age-long, pernicious practice of destroying local investments and eroding the business climate for partisan reasons. Time was in this country when industry and manufacturing thrived and Nigerians produced most of the things they needed for everyday living. While, in recent years, the auto industry, say, has witnessed a revival, such that Nigerians could forgive not seeing the days of such assembly plants as Volkswagen, Peugeot and Leyland, are Nigerians merely to forget the fact that they once knew such businesses such as Berec batteries, Exide Batteries, Nigeria Paper Mill Ltd, Tate and Lyle Sugar Company, Osogbo Steel Rolling Mills, Oluwa Glass, etc?

Beyond nostalgia, Nigerians would give everything they could to have the manufacturing concerns of the past back, if only for their employment generation value. Thus, if Nigerians are still in pain over the demise of great businesses, not to talk about the exit of international companies such as GlaxoSmithKline, Sanofi, Equinor, and even Bolt Food from Nigeria’s shores, why seek to impair a current manufacturing concern for whatever reason? If there are issues between the Dangote Refinery and the regulatory agencies, why allow them to fester until the spectacle emerged of another country inviting the business mogul to establish refineries on its own soil, with the assumption that Nigeria is not business-friendly? What signal does that send to would-be investors in Nigeria? Human rights lawyer, Femi Falana, could not have put the issue better while speaking on the ongoing dispute surrounding the Dangote refinery: “The government’s actions are contradictory – seeking foreign investment while destroying local investment. This is dangerous for the country.”

Nigeria’s “refineries” are anything but refineries. For decades, they have been mere money guzzlers, and the criminals behind the heist dubbed “turnaround maintenance” have been allowed to enjoy their loot without any state recompense. Timelines are issued and shelved at will. The Federal Government should clean house, and resolve the Dangote Refinery conundrum without delay. The world is watching.

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