Tinubu’s Masterstroke, Local Private Refineries and Macabre Regulators
By Richard Elesho
Thankfully, President Bola Tinubu on Monday July 29, 2024, pulled a masterstroke to calm agitated nerves in the nation’s petroleum industry.
He directed that crude oil be sold henceforth to Nigeria’s largest petroleum investment, adjudged to be the second largest in the world, the Dangote Refinery and Petrochemical Company, in the nation’s local currency, the *naira.*
The new policy will similarly apply to other petroleum refining outfits in the country, notably the modular refineries located predominantly in the oil-rich states in the South South zone.
Before Tinubu’s intervention, the Nigerian business environment had been loudly tempestuous. On a good day, Aliko Dangote, reputed to be Africa’s wealthiest man, is not a man of many words. His calm, cool, and calculated look may belie the size of his stupendous wealth.
But looking every inch like the one beneath in a rowdy dog fight, a fortnight ago, he lost his signature sober mien during an exclusive media engagement. His frustrations were palpable as he made a pyrrhic offer to abandon his legacy investment in the petroleum sector.
“Let them (the Nigerian National Petroleum Company Ltd, (NNPCL) buy me out and run the refinery the best way they can. They have labelled me a monopolist. That’s an incorrect and unfair allegation, but it’s fine.
If they buy me out, at least, their so-called monopolist would be out of the way. It does appear that some people are uncomfortable that I am in the picture. So I am ready to let go, let the NNPC buy me out, and run the refinery.”
Dangote is the metaphor of a dog pushed to the wall. He is, in fact, the aggregate of the frosty relationship between select operators in the petroleum industry and the regulatory agencies.
The current hostility emanated from allegations by Ahmed Farouk, head of the Nigeria Midstream and Downstream Petroleum Regulatory Authority, (NMDPRA), that petroleum products refined in the country are adulterated.
“Dangote refinery as well as some local refineries produce between 650 to 1200 ppm. So, in terms of quality, their quality is much more inferior to the imported quality.” He said.
As to be expected, Farouk’s remarks have literally set the highly combustible industry on fire, with stakeholders calling for change of guards in the nation’s milk cow industry.
The House of Representatives has initiated an investigation into the issues with a call on President Bola Tinubu, who doubles as Petroleum Minister to suspend the loquacious ACE.
Similarly, the junior minister in the Ministry of Petroleeum Resources (Oil) Senator Heineken Lokpobiri held an emergency meeting with all stakeholders in his office on Monday, 22 July. Heads of the regulatory agencies and Dangote attended the meeting aimed at calming frayed nerves and ending the mbroglio.
Taking into account the contributions of Dangote in the nation’s business firmament, he is one investor the Tinubu presidency will not want to trifle with. Same with other patriots respectively contributing their quotas to the nation’s gross domestic product, (GDP).
Nigeria is an oil rich nation with an unenviable trajectory in the sector. The four state-owned refineries in Port Harcourt, Warri, and Kaduna have existed only in names for the better part of three decades, forcing the country to rely solely on fuel importation.
Over time, the 650,000 bpd behemoth, Dangote Refinery, Lagos, and over two dozen modular plants across the country, some of which have started production and meeting demands in their geopolitical catchments were conceived.
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Notable among those in operation are Watersmith in Ibigwe, Imo State, Aradel in Ogbele Abua, Rivers State, Edo Refinery, OMSA PILLAR ASTEX COMPANY Limited (OPAC Refineries) and Azikel Refinery, Bayelsa State.
Designed to process a variety of crudes, including African, Middle Eastern, and the American light oil, Dangote Refinery is the biggest single train refinery in the world. It covers approximately 2,635 hectares and has a total storage capacity of 4.5 billion litres enough for 20 days of crude requirement.
The refinery has a sea port and 435 MW power plant that can meet the total energy requirement of Ibadan Electricity Company in charge of power supply to five states, namely Oyo, Ogun, Osun, Kwara, and Ekiti. Embedded in the gargantuan enterprise are petrochemical and fertilizer plants. Its workers are in excess of 30,000.
When these facts are added to the number of people employed by the modular refineries, and their potentials for both local and international trade, it won’t be difficult to see the connection between those minding the regulatory agencies and economic sabotage.
Indeed, the operational environment for the indigenous investors seems to be losing its clemency. There have previously been alarms raised about difficulty in accessing crude, raw materials, and other bottlenecks.
Farouk may have played the ostrich. Aside from its bureaucratic services, the agency that he heads and the NNPCL, led by Mele Kyari, have the mandate to permanently station their men on the ground in each of the refineries for quality control and to ensure compliance with best global practices.
What could have happened to this process before the media trial? In any case, several tests conducted on products of indigenous refineries have confirmed them to be of international standard.
Members of the House of Representatives, media practitioners, and other stakeholders who visited the $20 billion investment in Lagos all confirmed the low sulphur content of the products.
Many people have located the essence of Farouk’s outbursts in what is described as his rabid desire for the country to sustain the satanic fuel importation regime.
Dangote, who insisted on the integrity of his products, alluded to this when he said some senior executives of the NNPCL, own blending plants abroad.
“We know where they blend these things. Some of the NNPC people and some traders have opened a blending plant somewhere off Malta. We all know these areas. We know what they are doing,” Dangote said.
The dogged industrialist ought to know. While Kyari has made a lame attempt to extricate himself from the indictment, Farouk has kept sealed lips. The rising fuel importation portfolio into Nigeria from Malta, an archipelago in the Mediterranean southern Europe, corroborates Dangote’s assertion.
Information obtained from *Trademap,* an international data company, shows that there were no imports from Malta between 2017 and 2022.
It is, however, curious that there has been a sudden surge to $2 billion (and still rising) fuel importation from Malta Island since 2023 to date!
Many Nigerians have called for a ceasefire in the interest of the fatherland. One of such is Dr. Akinwumi Adesina, President, Africa Development Bank, (AfDB).
Hear him: “This whole disparaging of Dangote is uncalled for. It is self-defeating. And it is very bad for Nigeria. Who will want to come and invest in a country that disparages and undermines its own largest investor?” Investing is tough. Pettiness is easy.
It sadly sends a signal that the price for sacrificing for Nigeria is to get sacrificed…We must not be myopic.” Indigenous investment is the surest route to getting the Nigerian economy out of the woods. A word, as they say, is enough for the wise.
Richard Elesho is a Senior Editor with The News
