NOW THAT DANGOTE REFINERY IS LIVE

able to refine 210,000 bpd; Warri, 125,000 bpd; and Kaduna 110,000 bpd also. All on paper.

Several stats have been published by Dangote Refinery, but the one that easily pops at me is that when producing at full capacity, it can meet all our petrol, diesel and aviation fuel needs. In other words, we would not have to import refined products again. I find this satisfying: my dream has always been that we would stop importing products. We pride ourselves as an oil-producing giant but we are not even enjoying most of the benefits in the industry chain because of poor thinking. I used to campaign vigorously that government should take the bull by the horn by investing in a mega refinery to meet our local needs. It could then lease out management and sell it off in the future.

I received a long lecture from the CEO of a downstream company at the time who told me emphatically that building refinery was a waste, that it was not a profitable business. He said no new refineries were being built globally. He also said, ominously, that there would be little or no difference between local refining and importation of petroleum products, concluding that the business case for a refinery was bad. “The difference between refining in Nigeria and importing from Europe is shipping cost,” he said and I paraphrase. “If you may know, shipping is the cheapest form of transportation in international trade. There is no advantage with having a refinery in Nigeria.”

I did not agree with him, even though he sounded convincing. I was thinking of the local jobs and the value chain, but I was not ready to argue my case. He was enjoying so much patronage in the fuel importation business under the President Obasanjo administration that I did not expect him to agree with my proposal. And he had a strong voice in the policy direction of the government in the oil sector. Government officials consistently said privatisation was the way to go and that Obasanjo was not going to build a new refinery. Since then, we have been spending billions of dollars on treating our sick refineries without success. (Well, the jury is out on the latest Port Harcourt rehabilitation).

Now that Dangote Refinery has seen the light of the day, I am thinking of what might have been. If we were a thoughtful nation, we should be having regrets. Maybe someone would do the math one day and unearth the amount of forex we have been burning on fuel imports since 1999. There are many reasons for the sorry state of the naira today and fuel importation cannot be considered as a trivial factor. Fine, we are earning billions of dollars from oil export, but so also are we concurrently burning our forex income on fuel imports. The resources that should go into building our reserves are depleted on importing fuels. Let us now hope that forex demand for fuel importation will end.

The second regret is the way we have been trading away value through crude swap deals in the last 10 or more years. We created an arrangement under which we would basically barter crude oil for fuel imports. Using traders, we would exchange a barrel of crude valued at $70 for litres of petrol worth $70. I have always been wondering: what happens to the other products and byproducts in the same barrel? For all you care, those ones could be worth another $70 (just guessing). What a waste! But that is what happens when you have more oil than sense — or, to put it less dramatically, when the buccaneers, who know where all the value is, collude with those in authority to skin us.

Now that Dangote Refinery is onstream, we should expect an end to this. There will be byproducts both for export and local utilisation. Fertilisers aside, there is the carbon black which is raw material for paints, inks, rubber products, car tires and food colorants. The refinery plans to produce bitumen, which Nigeria currently imports. These are some of the benefits we threw away for decades, swapping crude oil for petrol and arguing that shipping cost is the only difference between local refining and fuel importation. Take a moment to imagine the lost forex revenue and the jobs that we bartered away while complaining that unemployment, poverty and crime were on the rise.

All said and done, we cannot undo the past. We took a lot of missteps in the past two decades. Some were genuine mistakes. Hindsight is usually a perfect 20/20 and we can all become wise after the event. But some missteps were self-serving. Remember that the fuel import and subsidy regimes created a generation of rent-made billionaires who were nothing but devourers and cankerworms. The past can remain in the past while we make the best of a possible new order. I know many people are suspicious of Dangote because of his business practices, but that is down to regulatory failure. I want to sincerely hope that the success of this project will attract more investors to the sector.

If the Port Harcourt Refinery really works as promised by the Nigerian National Petroleum Company (NNPC), that means we could start exporting refined products sooner than later, having achieved self-sufficiency in Nigeria. That would be a dream come true for me. I have always hoped that Nigeria would be among the world’s biggest exporters of refined products. The forex income is the first thing that jumps at you today given the parlous state of the national currency, but there are several other benefits. What about the tens of thousands of jobs? What about the potentially huge new economy around the petrochemical industry? Dangote took a big risk. Let us start enjoying the benefits.