Will Dangote ever deliver cheap petrol?
DELAYS and setbacks in mega- construction projects are nothing new. It doesn’t matter which country you are in, the level of investment you may have, or even the skill and determination of your government and workforce, these projects are hardly ever completed on time.
When, in 2013, Aliko Dangote announced his plans to build an oil refinery, it seemed like the perfect antidote to our never- ending petrol scarcity problem - and the high prices of petrol which have since happened after subsidy removal. Nigeria is the leading oil producer in Africa. Yet we have failed to maintain and fund a suitable oil refining structure. The Nigerian National Petroleum Company ( NNPC) Ltd is seen as the main culprit here and even its current Group Managing Director ( GMD), Mele Kyari, once admitted, “We recognise that today none of our refineries is operating… the refineries were essentially not properly managed over time, not just today but in the last 20 to 25 years.”
This maintenance failure, thanks in no small part to longstanding corruption issues, means that we continue to be the largest importer of refined petroleum products on the African continent. Spending $ 23 billion in 2022 alone. A ridiculous situation for a country blessed with such large oil reserves.
The construction of a vast and modern refinery like that which has been delivered by Dangote would have been a massive undertaking for any country let alone a single company. Yet, against all the odds and a constant barrage of abuse from critics and naysayers, both at home and abroad, Dangote achieved his goal.
When one considers the array of issues Nigeria has been facing over the past few years, it is nothing short of a miracle that this refinery even got off the ground, let alone completed.
In June 2023, President Tinubu ended the unsustainable fuel subsidies. This led to fuel prices increasing more than threefold in the following months - heightening expectations for the refinery to commence operations and deliver cheaper petrol.
For months, everything was in place - except for one small problem. The refinery was unable to get a single drop of crude oil delivered by NNPC. Just when the entire country desperately needed this ultra- modern refinery to start delivering, Dangote lay dormant with no fuel to process. Who could possibly gain out of this ridiculous situation? In 2021, the NNPC signed a joint deal with the energy company ‘ Vitol’ and local Oil Marketing and Trading Company ‘ Matrix Energy’ for $ 1.5 billion. This advance funding was in exchange for 15,000 barrels of crude oil per day for each company for five years. Many, including oil industry experts, were surprised by the presence of Matrix in the deal. Vitol is one of the biggest international players in the energy sector: it has financial leverage to win the NNPC oil swap deal and a ready international market for the crude it receives.
The Dangote refinery is an incredible achievement. Nigeria should be celebrating this success. Are a few individuals out once again to spoil the party instead? What makes this story ironic to the casual looker is the fact that the NNPC has taken a 20 per cent stake in Dangote’s refinery and will pay back this investment with both cash and crude oil. Hence, on the surface, it appears a straightforward matter and in the interest of Nigerians for the refinery to start functioning as early as possible.
But there is a catch: the five- year crude- for- cash deal Mele Kyari had delivered to Matrix and Vitol will last until 2026. For Matrix, a minnow in the industry, it needs to continue the importation of refined petroleum into the country and maintain its sale at the current high prices.
In addition to the issues with his refinery, the Lagos headquarters of Dangote’s businesses were raided this January, by officers of the Economic and Financial Crimes Commission ( EFCC). The public reason was the connection with a probe into favourable exchange rates handed out by the country’s former central bank chief Godwin Emefiele.
But events point the compass needle elsewhere - at a grand scheme to choke the refinery operations which is where the bulk of the forex went. Any further delay in the starting of refining is good news to the shadowy powers as hundred percent importation of petrol will continue.
Rumours are flying about who is to blame for this but the idea that President Tinubu would have anything to gain from such a crusade is bordering on fantasy. But Tinubu is no fool. He knows the people of Nigeria will not look kindly on those who are found to be behind this scheme.
As usual, these individuals close to him are keen to wield the power that their proximity to him affords them. And they don’t care what it costs Nigeria in the process. Whatever his relationship with Aliko Dangote, Tinubu is well aware that the presence of the richest man in Africa investing in Nigeria during his tenure can only be a positive, both for his Presidency, as well as the country.
And President Tinubu is evidently aware of this. At the recent Nigerian Economic Summit in Abuja, he had justifiably praised Dangote for his efforts. “You are doing well. Keep doing the good things you are doing. Keep investing in Nigeria,” he commented. Thus, President Tinubu must not allow his men to cause a scandal of this hue as it will live long in our collective memories.
We should get our cheap petrol.