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Dangote refinery: Dangers of a single narrative – sifting facts from emotion | RICHARD AKINOLA

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Richard Akinola

 

When the Dangote refinery controversy blew up, naturally as someone wired to support anyone l perceive to be oppressed, this time, Dangote, l lined up in support of the richest man in Africa.

I perceived he was being unduly treated by the Downstream and Midstream regulators, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). For days, l had heated arguments with people with opposing views on this matter. However, Ademola Adigun, one person l respect on this app, cautioned that people should not be too emotive on this matter but seek knowledge. I took that as a challenge.

Subsequently, in an attempt not to look foolish out of emotive consideration, l opened my mind to critically study the issues involved and even the nitty gritty technical details of the oil and gas system. And because l owe an obligation to educate people, l had to open up myself to information, researching on this issue and the petroleum sector, devoid of emotion.

While several groups of people, including one of my constituencies -the Civil society, have made pilgrimages to the humongous site of the Dangote refinery, unarguably, the largest private refinery in World, l decided, what in my opinion, was sifting facts from emotion. The issue has even reverberated in the hallowed Chambers of the House of Representatives, where the adhoc committee set up to investigate the issue, among other issues in the upstream and midstream petroleum section, was dissolved yesterday.

In a report today by Daily Nigeria, the Speaker, Abbas Tajuddeen, dissolved the committee over alleged compromise by some members of the committee who had exculpated the richest man in Africa, even before the assignment kicked off.

From my findings, there are three major critical issues that are affecting the operations of Dangote Refinery

1) CRUDE SUPPLY-FEEDSTOCK

It does appear that when Dangote was building the refinery, there were no proper arrangements on ground on how he will get feedstock for the refinery. His refinery is the largest single train refinery in the world.
Nobody builds and opens a refinery of this magnitude without refinery agreement to get feed stock. Dangote didn’t have a feedstock agreement for his refinery.

I have read where some people claimed that he has an agreement with NNPC Ltd but that arrangements was not a feed stock agreement. What happened with the NNPC arrangement was that during the project building phase, Dangote Refinery project got stuck and NNPC Ltd got the approval of the President to take equity.

Subsequently, the NNPC got a loan and paid $1bn as part of the 20 per cent equity while the rest was to be paid in crude supply.

The lack of feedstock was part of Dangote’s problem and he is now sourcing feedstock when the refinery is powered. So far, NNPC Ltd has given him 39 cargoes.

2) CRUDE OIL PRICES
Dangote’s claim that IOCs are selling crude oil to him at $6 per barrel above international price doesn’t seem to be true. What l discovered is that Crude oil has different grades. What he got from the US is WTI and the price is not the same as others.
Another key issue under pricing is that the margin of sale of crude oil is different because it is an international business. There is what is called market margin and it is usually from $1.5 to up to $20 per barrel.

There are several crude grades and Dangote Refinery uses different grades of crude to blend. So, when Dangote said he is importing from the United States, it is because he needs it as part of the grades to be used to blend in his refinery to produce petroleum products. His refinery needs several percentage of Bonny light, WTI and others to be able to blend very well. But he is using the fact that he imports from US to give the impression that he is importing from US and other countries, when in actual fact, is that he is sourcing different crude grades to blend.

Another critical point of under pricing is that the marketers buy this crude grades and add their own margin which ranges from $1.5 to $20 but the Nigerian government is giving it to Dangote at a margin of $0.5 per barrel which to me seems to me to be a good deal for him.

One other contentious issue is that Dangote is also persuading the regulator, to persuade the International Oil Companies to give him crude but the IOCs cannot do that because they have Production Sharing Contract (PSC) with the Nigerian government. Through the PSC, the IOCs produce, give Nigeria government its share and take the share of their crude and sell to marketers. Dangote didn’t enter any agreement with the IOCs to give him feedstock. What people must also know is that these IOCs borrow money from banks, invest in equipments, drill the oil fields, give government its share and take theirs, sell, recover their costs and make further investments.

Also, Dangote wants to use the local refinery obligation to obfuscate issues but this is not working for him because the local refinery obligation, according to the PIA, is based on a willing buyer and willing seller arrangement. This means the product must be available, and the parties must agree on the price in line with Section 109 of the PIA, which deals with the National Crude Oil Requirement of Refineries. The section states that the Nigerian Upstream Petroleum Regulatory Commission shall base the allocation of the domestic crude oil supply obligation applicable to the respective lessees on the National Crude Oil Demand requirement supply curve, which is the supply curve of crude oil or condensate that can be supplied on a voluntary basis at the prevailing international market price.

3) DOWNSTREAM
On the controversial issue of licensing of Dangote Refinery, while it has the license to build the plant, the refinery does not have license that covers other parts of its operations.

For monopoly, Dangote is asking the regulator to direct all oil marketers to get petroleum products from his refinery. But the question to ask is: Can Dangote guarantee Nigeria three billion liters of petroleum products per day in strategic national reserves for 32 days and not sell it? As a business entity, for Dangote to keep these products in strategic national reserves without selling them will lead to huge losses for him.

For the regulator to give Dangote that monopoly that he asking means that the business of other oil marketers would be killed and this is against the policy of deregulation because marketers should be allowed to import so there can be healthy competition.

Another critical point to note is that Dangote Refinery operates in a free trade zone and he will be exempted from paying tax to government. This is a loss of revenue to the government. The petroleum products from the refinery would be sold in foreign currency instead of naira to Nigerians as oil marketers who want to buy from there will fill form M (Importers form) in the bank.

Another contentious issue is the sulphur content in the petroleum products. It was reported in the media that the NMDPRA has minimum of 11 staff members in Dangote Refinery and all other local Refineries. The test of the petroleum products from the refinery are done daily and sent to the regulator. This means the regulator knows what they are saying when they stated that the product is inferior.

One worrisome aspect of the whole arrangement is that Dangote will need a minimum of $1.8bn working capital to operate the refinery and no bank would be willing to give it to him because he appears to be at a financial tight corner.

This was further confirmed with yesterday’s International Fitch ratings which downgraded the Dangote industries Limited, reflecting the precarious liquidity position of the business conglomerate.

The report stated inter alia that the group’s liquidity position, “followed lower than expected disposal proceeds, operational and financial underperformance compared to our prior expectations, also affected by local currency devaluation, and lack of contracted backup funding to repay its significant debt facilities maturing on 31 August 2024….We view the lack of DIL’s audited accounts for 2023 as a corporate governance issue. The RWN reflects uncertainty related to the group’s ability to refinance maturing debt.

“Lack of tangible steps to refinance or repay the maturing debt would lead to further downgrade while we do not expect a positive rating action until the company’s liquidity position improves substantially.”

I love Dangote and his can-do spirit, the reason l initially was emotive when this controversy broke when l felt he was being unduly treated but my study of the whole scenario has changed my perspective. I want him to succeed but he too has to do the needful. The monopolistic mindset which he carried from his cement business cannot work in the deregulated petroleum sector. More importantly, he needs a pragmatic approach to solve his liquidity challenges in this petroleum sector, which, with the benefit of hindsight, he underestimated, based on the seeming hand-in-gloves relationship he had with the previous leadership of the CBN, where it appeared he had “easy” access to funds.

Soji Adekunmbi, an Abuja based public policy analyst, in an article in The Cable, proffered solutions to Dangote to enable him navigate the humongous financial quagmire he seems to have found himself, when he posited: “A few options are available to Dangote but the most viable of them is that he should consider divesting some of his shares in the refinery. It may seem a difficult option but it is the best for him given the circumstances.

There are business entities who took a similar path when confronted with some of the challenges seemingly facing Dangote. In Saudi Arabia, the Saudi government sold Aramco, the national oil company to the public when it faced difficulties.

Even Microsoft founder, Bill Gates sold off a majority of his stake in the company retaining a mere five percent interest in the business. Gates took that route after facing anti-trade court cases following Microsoft’s monopolistic nature, which had caused the collapse of several IT companies.

Dangote should do the needful by selling shares to Nigerians as it is obvious given the intricate nature of business in the oil and gas sector particularly the huge capital outlay required to keep a business going, he cannot pull it off alone.”

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Opinion

Izala Sect: Crisis of Leadership, Accusations of Shiism Meddle in Polarising Its Members, History Repeats Itself

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By Yakubu Nasiru Khalid

Formally, the Izala sect was formed in 1978, created to eradicate innovation (bid’a) within the Islamic doctrine. It has a modern structure and leadership both at the state and national levels. Therefore, the leadership of the Izala has come with a well-structured and hierarchical bureau and the feeling that they are different from who they see as the “Conservative Islamic Group.”

The structure comprises three arms: the Council of Ulama, the Administrative Council, and The First Aid Group. Each of the councils has its own head and followers to achieve designed goals. Even with this structure, the sect experienced crises at both levels, which polarised its leadership.

The reasons attached to the polarisation of Izala at the national level later descended to many states where the organization has a large following. The reasons were multifaceted, from jurisprudence, political, financial, and external meddling to sundry issues.

Initially, there was a problem regarding the leadership of the organization, especially the question of who was the supreme leader of the organization between the Administrative Council and the chairman of the Ulama Council. At the time, the head of the Administrative Council was Alhaji Musa Muhammad Maigandu, from Kaduna, and Sheikh Ismail Idris was the chairman of the Ulama Council, Jos faction recognized Ismail Idris.

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The Jos faction rejected Maigandu for not being a scholar but a businessman, arguing that an Islamic organization should be led by a scholar, not a businessman. This added more fire to the crisis.

Furthermore, the Kaduna faction was very critical of some views and fatwas of Ismail Idris, especially those that dealt with the issue of bid’a. According to Ismail Idris, the followers of Izala would not pray behind an Imam who’s not a member of Izala, they would also not marry from the family of a person who inclined to Sufism and would not eat the meat of an animal slaughtered by a follower of the Sufi group.

The Kaduna faction was outrightly against these views and opposed them. Another vital factor that played a role in the split of the Izala group was the accusations and counter-accusations of financial management. Ismail Idris was accused of organizing in the Arab countries, and he was further accused of personalizing vehicles donated to the Izala sect.

In addition, Ben Amara argued that the eruption of the Gulf War in the 1990s between the USA and Iraq was another important factor in the polarisation of the Izala. The Jos faction supported the American invasion of Iraq because of the Saudi Arabian interest, while Kaduna supported Iraq. The Jos faction called Kaduna “Saddamawa” meaning (supporters of Saddam) while Kaduna called Jos “Bushawa” meaning (supporters of American interest).

The leadership of the Jos faction blamed Shia for the internal crisis of Izala and accused some Ulama of being secret agents of Shiism who were working toward dismantling the group.

yakubunasirukhalid@gmail.com

 

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Opinion

Gov. Yusuf’s executive order extending retirement age for HoS, Kano Assembly Clerk, and others unconstitutional

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Sani Usman-DanAbdullo, a Director of Admin and General Services at the Kano State Agency for the Control of Aids, KSACA, has written to the state assembly, seeking its intervention in the
Executive Order issued by Governor Abba Yusuf.

Mr DanAbdullo, in a petition dated January 6 and addressed to Speaker of the Assembly, Jibrin Ismail Falgore, recalled that the governor had in January 2025 issued Executive Order No. 1 of 2025, extending the service period of some civil servants.

According to him, the governor extended the service year of the Head of Service, Assembly Clerk, some judicial officers, Permanent Secretaries and a host of other staff in the state health sector for 2 years after they were due for retirement as of December 2024.

The lawyer also recalled that the state assembly had enacted a law fixing the retirement of staff at 60 years of age or 35 years of service, depending on whichever comes first.

Mr DanAbdullo, therefore, asserted that the governor’s executive order was unconstitutional, “since the House has already made laws which the order seeks to alter”.

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He noted that that executive order is not meant to alter, amend, modify or expand the law made by the legislature.

“This act, is, therefore, a clear violation of the principles of rule of law and separation of powers enshrined in our Constitution being not only a clear attempt to usurp the legislative powers of this Honourable House, but to contradict the existing laws already enacted by it in exercise of its powers as such,” the petition added.

While dismissing a claim that the governor issued the order in the spirit of the Doctrine of Necessity, Mr DanAbdullo said there was no justification for extending the service years of the affected retired officers since there are many competent hands with adequate qualifications to be appointed.

“And as for the staff in the health sector, they can be retained on contract arrangement in line with the existing service law of Kano State,” the petition added.

Mr DanAbdullo, therefore, warned that the provisions of the Constitution must not be subordinated to any other law, and must not be subjected to the indignity of deletion of any section or part thereof.

“In view of the foregoing, I urge this esteemed House to employ all legal mechanism at its disposal to overrule the Governor’s decision in the act complained of, which is capable of setting a very dangerous precedent that will ruin the entire public service system of our dear State, if allowed.

“TAKE NOTICE Sir, this act of indiscriminate issuance of executive order, if allowed, will cause the entire Kano State the following catastrophic effects,”

The State Assembly failed to attend to the petition even if it means dismissing it for fear of the governor, if the petition is not attended to we will have no option but to go to court”. He added

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Opinion

The Movement (Tafiyar Matasa) and the Very Big Questions to Answer

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Comr. Habu Hassan Abdullahi

Comr. Habu Hassan Abdullahi

Yes, I am not some sort of social critic who would unfairly denigrate someone’s achievement for personal gain or political interest that I do not have. Thus, this is pre-eminently the right time to speak the truth to the members of my generation in Nigeria whether they care to accept it or not. But remember the truth is always truth and can stand alone.

No doubt that not everyone is happy with how leadership is running in this country, with the exception of those at the corridor of power. But this is not enough to be a raison d’etre to handle our dear nation to the hands of inexperienced youths. Forgive my pen for the use of “inexperienced”. Just because most of them have never been to real leadership. Of course, I am myself opposed to the exclusionary habit of the present politicians, they’ve relegated youths to the mantle of power but we have to cautiously control our faculty of thinking to avoid getting entangled in a lust for power.

I was very happy when I heard the idea of “The Movement” known as “Tafiyar Matasa” in the Hausa language. And of course, the genesis of the movement was attributed to the unavoidable “EndBadGovernance” protest of 1st August, 2024. The movement began immediately after the protest, in fact, it is one of the noticeable outcomes of the protest due to the unity it brought. The idea of the movement was preached and promoted by some prominent northern activists and social media influencers to serve as a last resort to the youths in their effort to bring good governance. No one can deny the fact this is a laudable effort. But the very big question supposed to be asked here is: youthfulness is the only parameter and yardstick to measure the caliber of a good leader? If yes, why Yahaya Bello (Former Governor of Kogi) and Abdurrasheeed Bawa (former EFCC Boss) were arraigned for looting the public treasury! The point I want to make here is, being young or old will not be a determining factor for an individual to be a good leader. We can have corrupt leaders within any range of age.

Another important issue to take into cognizance is the failure of some youths to comprehend the logic and existing distinction between being a good activist and being a good leader. Leadership is quite different from activism, therefore, a good activist may not necessarily be a good leader. It is common knowledge that the conveners of this important movement lack practical leadership acumen and organizational skills that are fundamental for successful leadership. Okay, should we handle our future to the trial and error leaders? We have to exercise extraordinary care when it comes to leadership.

Yet another problem faced by this movement is financial constraints. To be sincere and frank, the quantum resources required to run a great national political movement like this oversizes the pockets of the conveners. Another organic question to ask here is: where the movement conveners can solicit humongous financial resources? From the politicians they are castigating? If yes, this is performative contradiction!

Finally, I would like to remind my fellow youths that new breed, as the late Yusuf Maitama said, cannot solve the Nigerian problem. There must be mutual cooperation and understanding between the new breed and old breed. We must work together with them to acquire all necessary experience, knowledge, and practical leadership skills.

Written by
Comr. Habu Hassan Abdullahi
From Bayero University, Kano
Department of Education
Contact via 07065941454 or habu92hassan@gmail.com

 

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