Who Is Afraid Of Dangote’s Refinery? – By Martins Oloja

ALIKO Dangote doesn’t need any introduction to Nigerians and indeed Africans. He is generally believed to be the richest man in Africa and his wealth is from entrepreneurship and investment that can be fact-checked. He isn’t one of those the iconic Mahatma Ghandhi once classified as “sinners” who become “wealthy without work”. He has become a global citizen of Nigerian extraction. But today isn’t a day to talk about Dangote’s profile.

I am quite curious and concerned about what he has been lamenting about. I think it is important for us as informed citizens to do some contextual reporting about his business, which is supposed to be part of building Nigeria’s and indeed Africa’s brand reputation. The question: who is afraid of Dangote’s Refinery isn’t supposed to be regarded as a provocative question in the world of local or foreign direct investments. It is supposed to be a rhetorical question about the way we are going as a nation. The simple question seeks to shed some light on some elephants we have found in our rooms. We can reframe more questions to answer the original question here.

I understand that is the way we are: we ask more questions to answer questions – to avoid answering the original questions. Here are some of them: Should there be any reasons to be afraid of Dangote’s refinery that we are told should solve Nigeria’s lingering and age-old energy crisis? Is the Dangote’s Refinery a threat to the moribund Refinery being refurbished in Port Harcourt, we were told would be ready since 2022? Is Dangote’s Refinery a boon or a bane to Nigeria? Will the powerful Nigeria’s No.1 enemies, the untouchable oil thieves in Nigeria be excited about successful production from Dangote’s Refinery? Will the very influential scoundrels called fuel subsidy mafia members who have always seized Nigeria’ commonwealth like the promise of Dangote’s refinery? Isn’t it expedient for the almighty NNPCL to rise in protection of Dangote’s Refinery?

When will the NNPCL executive management who channelled the federal government’s 20 % investment in Dangote’s Refinery address the recent outcry and allegation by Aliko Dangote that the international oil companies (IOCs) had conspired to frustrate operations of his new refinery? When will the Minister of Petroleum Resources address the concerns raised by Dangote, Nigeria’s most significant investor? Why is there some curious grave silence even in the mainstream media about the lamentation of Dangote? As the lingo goes here, is Dangote on his own? When will the Federal Government assure the anxiety and even curiosity of international community and the foreign direct investors that Nigeria is indeed safe for Foreign Direct Investments we badly need? Who will defuse tension arising from Dangote’s travails and tell concerned Nigerians and even intending investors that investments are safe here? Before we ask more questions about the travails of Africa’s foremost investor, let’s examine some facts to deconstruct the concerns here.

The Dangote Petroleum Refinery

In the beginning when a glimmer of hope emerged on the refinery, we were told that the $20 billion Dangote Oil Refinery is a 650,000 barrels per day (BPD) integrated refinery project under construction in the Lekki Free Zone near Lagos, Nigeria. It is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility. We were also elated that the Pipeline Infrastructure at the Dangote Petroleum Refinery is the largest anywhere in the world, with 1,100 kilometers to handle 3 Billion Standard Cubic Foot of gas per day. The Refinery alone has a 435MW Power Plant that is able to meet the total power requirement of Ibadan DisCo, for instance.

What is more, we had great expectation as were further told that the modern Refinery will meet 100% of the Nigerian requirement of all refined products and also have a surplus of each of these products for export. The facility is to produce diesel, jet fuel, Premium Motor Spirit, popularly called petrol, polypropylene, among others. As expectations began to rise and rise, we were told in February 2024 to ‘calm down’ as only government approval delayed its kick-off.

Indications had emerged then that lingering regulatory approvals had stalled Dangote Petrochemical Refinery’s plan to release aviation fuel (Jet A1) and diesel for sale in the Nigerian market in January as some intelligence had then revealed. A week after the January 31 timeline set by the management of Africa’s largest refinery to begin sale of its petroleum product in the local market, the refinery was still battling to cross the hurdles of the several layers of regulatory approvals.

On January 12, 2024, Dangote refinery announced that it had commenced the production of Automotive Gas Oil, popularly called diesel, and aviation fuel or JetA1. In a statement issued then by the firm, the President, Dangote Group, Aliko Dangote, thanked President Bola Tinubu for his support, encouragement, and thoughtful advice towards the actualisation of the project. Dangote also thanked the Nigerian National Petroleum Company Limited, Nigerian Upstream Petroleum Regulatory Commission, NMDPRA and Nigerians for their support and belief in the historic project, as he revealed that the facility would pump out diesel and aviation fuel in January, subject to regulatory approvals.

He said, “We thank President Bola Tinubu for his support and for making our dream come true. This production, as witnessed today, would not have been possible without his visionary leadership and prompt attention to details.

“His intervention at various stages cleared all impediments thereby accelerating the actualisation of the project. We also thank the NNPC, NUPRC and NMDPRA for their support. These organisations have been our dependable partners in this historic journey. We also thank Nigerians for their belief and support in this project. We have started the production of diesel and aviation fuel, and the products will be in the market within this month once we receive regulatory approvals.” But it was confirmed on Wednesday, February 7, 2024, that the plant was yet to pump out neither diesel nor aviation fuel, amid an anxious wait by operators in the downstream sector and Nigerians consumers.

Findings had then shown that major and independent oil marketers were keenly waiting for the sale of refined products from the $20bn Dangote Petroleum Refinery even though the January 2024 target for the release of fuel by the facility had passed.

But officials of the regulatory agencies in the oil and gas sector revealed to the media then that the facility had yet to complete the various stages of its regulatory processes. This was the beginning of suspected spanners in the works. It was gathered that officials of the Nigerian Midstream and Downstream Petroleum Regulatory Authority were still assessing the products being produced by the plant before the agency would issue regulatory approvals for the products’ release into the market. Multiple sources at both the Abuja headquarters and Lagos regional office of the NMDPRA, the regulator of Nigeria’s midstream and downstream oil sector, confirmed to media inquirers then that the process for the release of regulatory approvals was on-going. And there was no doubt as regulators should be allowed to do their job. Part of the words from the powerful regulators:
“Definitely before any release of products is made, approvals must have been granted and this is being worked. The appropriate department is working out the approvals.

“We cannot tell you exactly what these approvals consist of. But the fact is that for Dangote refinery to release products, the requisite approvals must be granted, because the regulator needs to look at the quality of the products, whether they (products) meet specifications, etc, before they are being released to the market. So the approvals are being worked on. However, I cannot give you the date when it is going to be completed, but just know that the process is ongoing and I’ll brief you on an updated position…”

Meanwhile there was a report on January 15, 2024 that the seven major oil marketers in Nigeria had registered with the Dangote Petroleum Refinery for the lifting and distribution of refined petroleum products produced by the $20bn plant. This raised more hope of a better tomorrow for expectant Nigerians. The report stated that dealers under the aegis of the Major Oil Marketers Association of Nigeria (now MEMAN) confirmed that with the registration, they would commence the distribution of fuel produced from the facility once the commercial terms were sorted. It further stated the Independent Petroleum Marketers Association of Nigeria also revealed that they met with the management of the Dangote refinery to discuss terms of product loading.

Similarly, the Petroleum Products Retail Outlets Owners Association of Nigeria stated that PETROAN had been engaging the management of the multi-billion dollar refinery for the supply of products from the facility. The report outlined the seven major marketers to include 11 Plc, Conoil Plc, Ardova Plc, MRS Oil Nigeria Plc, OVH Energy Marketing Limited, Total Nigeria Plc and NNPC Retail. It has been reported that the facility has its own 435 megawatts power plant, capable of supplying electricity to a major Nigerian city and the project is expected to create 135,000 permanent jobs in the region.

Who would not believe Dangote Group’s president when on January 12, 2024, he described his refinery as a game-changer for Nigeria’s oil industry and a significant infrastructure development in Africa. “This is a big day for Nigeria. We are delighted to have reached this significant milestone. This is an important achievement for our country as it demonstrates our ability to develop and deliver large capital projects. This is a game-changer for our country, and I am very fulfilled with the actualisation of this project.”

The first crude delivery was done on December 12, 2023, and the 6th cargo was delivered on January 8, 2024. Then some curiosities began to emerge when on January 29, 2024, it was reported that the refinery was set to import crude oil from the United States, as the $20bn facility intensified moves to start pumping out refined products. The report stated that Africa’s largest refinery’s move to import crude from the US was a sign of just how competitive American barrels had become in the global market. The multi-billion dollar refinery, according to Bloomberg at the time, was also expecting two million barrels of crude oil from Trafigura Group in February.

The report stated that Trafigura Group sold two million barrels of WTI Midland to Dangote refinery for end-February delivery. Trafigura is a multinational commodity trading company headquartered in Singapore, with major hubs in various locations including Geneva, Houston, Montevideo and Mumbai. The group participates in the oil and petroleum products market. The situation room here is confusing us about the fate of that refinery. As a stakeholder in the Office of the Citizen, let me ask the last question for today: when will the Nigerian leader through the Petroleum Resources Ministry and NNPCL address the concerns and allegations raised by Aliko Dangote about the survival of his Refinery the nation has been waiting for?

Oloja is editor of The Guardian newspaper and his column, Inside Stuff, runs on the back page of the newspaper on Sundays. The column appears on News Point Nigeria newspaper on Mondays.

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