Dangote Deserves More Supports

Dangote Deserves More Supports—Editorial

Dangote Deserves More Supports

OpenLife Magazine, special editorial urges  Nigerian government to shelve any discouraging tendencies, through unfriendly policies, that may  hamper the short and long terms strategic gains of Dangote’s refinery, reputed to be the biggest single train refinery in the world 

Worried over a whooping N9.18 trillion deficit in the 2024 fiscal estimates which the federal government plans to finance through projected borrowing of N7 trillion, Nigerians have kept their hearts in their mouths in view of the biting high cost of living orchestrated by removal of oil subsidy.

To many, especially in the enclave of economically entrapped Nigerians, the months ahead appeared hopeless even as public office holders bask in royal entitlements.

But all that changed when a one million  barrel cargo of Nigeria’s Agbami crude berthed at Dangote’s off shore crude receiving terminal in Lekki at about 7pm on Thursday, December 7.

Joy enveloped the land. Hope eclipsed frustrations. And for the first time in a long time, Nigerans saw a better tomorrow in the horizon.

The Dangote’s trajectory in the oil and gas sector has been long in coming.

Notably, in the months preceding former President Olusegun Obasanjo’s handover to late President Umaru Musa Yar’Adua in the 2007 transition circle, Dangote and other partners in the Bluestar consortium had bought controlling stakes in the Port Harcourt and Kaduna refineries for a total sum of $721 million.

As of the time of sale, the Port Harcourt and Kaduna refineries were not working as a result of mismanagement and sabotage. They were built separately in 1965 and 1988 respectively.

Relying on the privatisation policy which allows government to sell government enterprises and assets, Obasanjo’s government tried, for years, to sell off the refineries but no major oil firm showed interest.

Earlier in his administration, Obasanjo awarded a Turn Around Maintenance contract of the Port Harcourt refinery to Chrome Oil, owned by Anambra business man, Emeka Offor. But nothing was achieved.

Equally sad was that Nigeria, Africa’s biggest exporter of crude, was reliant on imports to meet its millions of litres daily fuel needs, worth several billions in dollars annually.

Displeased by this unacceptable development, a Bluestar consortium led by Aliko Dangote pulled resources to acquire the refineries, turn it around to achieve the county’s pursuit of self-reliant in finished petroleum products, generate employments and accelerate Gross Domestic Product, GDP.

“The takeover of the Port Harcourt refinery, which has capacity to process 210,000 barrels per day (bpd), and of the 110,000 bpd Kaduna refinery, are for the good of Nigeria because the state-owned oil firm is unable to operate them,”  Dangote said, patriotically.

Suddenly, after the deal was sealed, eminent Nigerians and organised Labour faulted the sale of the refineries to Dangote’s Bluestar, alleging that it was not transparent.

In fact, the sale of the Kaduna Refinery was greeted with a wild protest that paralysed the Nigerian economy for four days in June 2007 while employees of the two plants resorted to prayers for the arrangement to fail.

The poisonous politics at that time, which outweighed the patriotic intentions of Aliko Dangote and his group led to series of twists and turns.

In one instance, late President Yar’Adua, who succeeded Obasanjo, was quoted to have told the Financial Times in an interview that he would consider reversing the sales if they were found to have been carried out without due process.

So bad was the situation that on July 17, the Dangote led Bluestar consortium wrote, saying it wanted a refund of the $561 million it paid for the Port Harcourt refinery and the $160 million it paid for Kaduna.

Confirming the decision taken by Dangote, Segun Adeniyi, then spokesman to Yar’Adua said: “They wrote formally to the ministry of energy and the presidency saying they’ve withdrawn from the sales.”

Optimistically, Dangote had hinted that the Bluestar’s investment in the refineries would bring a similar revolution that happened in the telecommunications industry to the downstream sector of the petroleum industry.

He said: “We believe a lot in our economy and will continue to invest as much as possible. We will replicate the revolution that occurred in the telecom industry.

“This is not just about buying into refineries. It is about going into the refineries, turning them around and expanding their capacities.”

He pledged that as soon as the turnaround of the companies was completed, they would be taken to the stock exchange in order to involve other Nigerians.

But that was not to be.

However, the Kano State born astute businessman soldiered on. He moved on and looked at the direction of Olokola Free Trade Zone, FTZ, in the Ijebu Water Side of Ogun State, a development that would have ushered economic rebound to the gateway State.

Before the botched purchase of the Port Harcourt refinery by Yar’Adua’s government, Dangote had nursed the idea of floating a brand new refinery with 21 century instrumentations.

Yet again, then governor Ibikunle Amosun’s alleged greed and poor business insights denied the State the multi billion dollar business opportunity.

To be clear, discussions about the Olokola FTZ for the Dangote’s refinery started during former governor Segun Osoba’s tenure between 1999 and 2003.

Osoba could not scale through the 2003 governorship election and Gbenga Daniel came in as Ogun governor. He saw the prospects in the initiative and finalised it. But Amosun’s government saw it differently.

First, Amosun’s government complained that they had approved much incentives for the Dangote’s cement in Ibese. Amosun therefore, decided to roll out stringent conditions.

Sensing that Dangote was ready to meet the conditions, governor Amosun raised the ante and demanded a stake in the business.

Dangote objected, saying that his business model does not accommodate Amosun’s proposed minority stake.
Expectedly, governor Amosun embargoed the project.

Curiously, Dangote had, at the time, taken a loan from the Paris bank and the interest was counting.
Not bothered about such financial risk, Amosun’s government delayed the project for a reasonable length of time, thinking that Dangote would capitulate.

At the last moment when he wanted to return the loan and pay off the interest, former Lagos State governor, Babatunde Fashola, got wing of the development and offered Dangote the Lekki Free Trade Zone free.

With the green light from Lagos State government under Fashola and supports from Bola Tinubu, now President of Nigeria,  Dangote and his team set out to work. By May 2022, significant progress had been made at the Lekki refinery.

On Monday,  May 22, 2023, a 650,00,00 barrels per day refinery, described as the biggest single-train refinery in the world, was commissioned by former President Muhammadu Buhari who left office on May 29, 2023 after two-tenure of eight years.

During the commissioning, Dangote, the billionaire businessman recounted how the revocation of the Port Harcourt and Kaduna refinery license won under Olusegun Obasanjo by the Umar Musa Yar’Adua’s government back in 2007 motivated him to spend over $18.5bn to build the world’s largest single-train refinery.

“Initially we thought to enter into the industry by acquiring the brownfield refineries under the Federal Government privatisation programmes in 2007. Regrettably, the outcome of the exercise was reversed and our payment was returned. This motivated us to rethink our market entry strategy and business model.

“We subsequently committed to entering the market boldly with a vision to invest in a greenfield refinery that will transform the industry in Nigerian and Africa as a whole and that was why we went for the biggest refinery ever built in the world.

“We have built the refinery with the capacity of 650,000 barrels per day of crude oil plus 900,000 metric tonnes of polypropylene in a single train which is the largest built ever.

“We have selected the best plant and equipment and the latest technology from across the world. our cluster location and offshore loading and offloading facility with the capacity to receive all our crude oil supplies and evacuate up to 75 per cent of our liquid product- giving us direct access to the rest of Africa and the global market for export.

In addition, 80 per cent of our production can also be discharged through trucks to go around Nigeria.

“Our huge investment of over $18.5bn in this industry has been prompted by our desire to support and contribute our quota to the Federal Government’s sustained efforts to transform our economy and properly position our country as a leading nation in Africa.” 

“It is our firm commitment that we will replicate in this sector, what we have actually achieved in the cement and fertilizer market where Nigeria will transit from being the largest importer of crude products to a net exporter by the end of August this year.

“We intend to ensure that our plants run at the highest capacity utilisation and the highest efficiency to enable us to export competitively to other markets, especially in the ECOWAS and the wider region in which 53 countries out of 55 are dependent on imports to meet their petroleum products demand.

“This is a clear opportunity for Nigeria given the African Union’s commitment to the creation of the African common market through the recently established AfCFTA regime.

“Beyond the availability of high-quality fuel for our transportation sector, the refinery will also make available for our industries the vital materials for a wide range of manufacturers in the plastics, pharmaceuticals, food, beverages, construction and many other industries.

“Second, both the refinery’s operations and ancillary businesses will generate massive job opportunities. The downstream value chain will equally provide far more absorptive capacity for labour in hundreds of thousands.
“Third, once our plants are fully commissioned and it is onstream, we expect that at least 40 per cent of the capacity will be available for export and this will result in significant foreign exchange earnings into the country,” an obviously elated and fulfilled Dangote stated.

Without doubt, the commissioning of the refinery with its corresponding promises of bright future, was a fulfilment of the desires of Nigeria and Nigerians who have been contending with suffocating petroleum products regimes.

Adding his voice to the  views and opinions of government officials and key players in the economy, governor of Osun State, Senator Ademola Adeleke, described the facility as, “A continental game changer with huge capacity to positively transform Nigeria and African economy.”

Renowned economist and Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane, noted that the Dangote refinery could help strengthen Nigeria’s macroeconomic stability, when fully operational.

However,  it looked, at some points that hopes were being relapsed into despondency when the set month of production at the brand new refinery evaporated.

But, on Friday, December 8, the confirmed receipt of one million barrels crude cargo by the Dangote oil refinery elicited joy in the land.

In so many quarters, stakeholders hailed President Bola Tinubu on the grounds of weighing in to  ensure that what is left to be done for the commencement of production at the refinery is not delayed.

Arising from that therefore,  OpenLife calls for more supports for  the refinery  to ramp up to its full capacity as it prepares to deliver the first batch of products to the Nigerian market.

Significantly, the 650,000bpd facility is not only the solution to cushion the effects of oil subsidy removal but would alter the international energy landscape and sanitise Nigeria’s petroleum sector.

More so and in view of current reality, Dangote’s refinery, covering a land area of approximately 2,635 hectares, is expected to address the challenging importation of almost 80 per cent of fuel in Africa- from Cape Town to Dakar and other parts of the continent.

This is not an impossibility given that the refinery which is expected to use an integrated distillation unit or one Crude Distillation Unit (CDU) to refine crude oil into various petroleum products, can refine petroleum products, such as petrol – 53 million litres per day; diesel – 34 million litres per day; kerosene – 10 million litres per day; and Aviation Jet, two million litres per day. There is also surplus of each of these products for export.

Diesel and gasoline products from the refinery would conform to Euro V specifications.

This should be supported.

 

 

 

 

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