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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.

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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.”

Opinion

Fifty Years, Four Terms. A Life Of Enterprise, Scholarship And Public Service-By Abbas Tajuddin

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Today, I celebrate my colleague and friend, Hon. Abdulmumin Jibrin Kofa, as he attains the golden milestone of 50.

Turning 50 is more than a birthday; it is a moment to pause, reflect and appreciate a journey already rich in accomplishment, service and impact.

Over four terms in the House of Representatives, Abdulmumin has brought to our legislative enterprise a rare combination of intellectual depth, business experience, courage and an unmistakable independence of mind. From his leadership of key committees, including Finance, Appropriations, Land Transport, Foreign Affairs, and Housing and Habitat, his contributions have reflected a strong grasp of public finance and a broad understanding of national affairs.

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He is, without doubt, one of the sharpest minds in our Parliament. His academic accomplishments, including two PhDs and an MBA, his experience in business and academia, his executive education at leading institutions, and his service at the Federal Housing Authority have all contributed to the distinctive perspective he brings to public service.

But beyond the degrees, positions and accomplishments is a man who has never been afraid to speak his mind.

Abdulmumin is forthright. He is courageous. He is independent-minded. And he is never one to hide his convictions.

In a Parliament, such voices matter. A healthy legislature must have room for principled disagreement, robust debate and legislators willing to speak for what they believe is right and in the interest of their constituents.

As you celebrate 50, dear Abdulmumin, I celebrate not only the milestones behind you but also the possibilities ahead.

On behalf of the leadership and the entire membership of the House of Representatives, I wish you good health, renewed strength, greater accomplishments and many more years of impactful service to your constituents and our dear nation.

May the next chapter be even greater than the first five decades.

Happy 50th Birthday, Hon. Abdulmumin Jibrin Kofa.

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Opinion

A FRIEND’S LETTER TO ABDULMUMIN AT FIFTY

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By Barr. Ismaeel Ahmed, OON

There is a particular privilege in knowing someone before the world decided who they were going to be; before the titles, the cameras, the offices and the public arguments. I have had that privilege with Abdulmumin Jibrin.

I knew Abdulmumin long before most people knew him as they do today, before the National Assembly and before the many chapters of public life that have since defined his name. So, as he turns fifty, I find myself writing not about the Honourable Member for Kiru and Bebeji, but about my friend, my older brother and school father. That distinction has always mattered.

I remember someone whose mind never seemed to rest. Chairman, as we fondly call him, could take an idea everyone else had accepted, turn it around repeatedly, question it from every direction and continue long after the rest of us had become tired of the conversation. I used to tease him about it, and sometimes I still do. But over the years, I have come to understand that this intellectual restlessness is at the very centre of who he is.

It explains the businessman, the teacher, the politician and the scholar who earned a PhD in International Relations and, years later, returned to Bayero University Kano for another in Economics. Chairman has never believed that learning has an end point. He is always searching for the next question and, inevitably, the better answer.

Yet, for all his accomplishments, what I value most about him is something much simpler: his loyalty. He remembers people. He remembers friendships, kindnesses and those who stood with him when there was little to gain from doing so. Beneath the forcefulness that people see in public is a tenderness and generosity that those who know him closely understand very well.

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I have also had the privilege of seeing him through both triumph and adversity. His political journey has had its share of difficult seasons, some of them difficult enough to discourage almost anyone. But Chairman has an extraordinary capacity to return. He reflects, recalibrates and rises again. Not because the fall did not hurt, but because he has always believed that a difficult chapter does not have to be the end of the story.

Perhaps that is one of the most important lessons of his first fifty years. We are not measured by never falling. We are measured by what we learn from the fall and whether we find the courage to rise again.

Another quality I have come to admire is his ability to create room for other people to grow. He does not merely occupy spaces; he opens conversations, shares ideas and encourages those around him to think beyond their immediate circumstances. Many people have benefited from his advice, introductions, encouragement and willingness to challenge them to become better versions of themselves. That influence may not always be visible, but it is one of the lasting marks a person leaves on the lives of others.

He also possesses a rare ability to remain connected to his roots while engaging confidently with the wider world. Whether in the classroom, the boardroom, the political arena or among friends, he carries with him a strong sense of identity and responsibility. His journey has taken him through different institutions and experiences, but it has not separated him from the people, values and community that shaped him. That balance is not easy to maintain, and it is one of the reasons his story continues to resonate with many people.

At fifty, therefore, I am less interested in counting Abdulmumin’s offices, businesses, degrees or political accomplishments. I think instead of the full measure of the man I have known: the businessman who understood risk, the scholar who never stopped learning, the politician who survived both victory and defeat, and the friend who still remembers to call.

Fifty is a beautiful milestone. It gives a man enough road behind him to understand the journey, and, God willing, enough road ahead to decide what he wants the rest of that journey to mean.

My Chairman, I hope the years ahead bring a little more patience to your restlessness and a little more peace to your ambition. Build more. Give more. Mentor more. Forgive quickly, as you have always somehow managed to do. And worry less about who receives the credit. History has its own way of separating noise from substance.

Happy fiftieth birthday, Sir. May the years ahead bring you more wisdom than ambition, more peace than pressure, more purpose than applause, and many more opportunities to give than reasons to receive.

Congrats.

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Opinion

All Hail The 17th Emir Of Gumel, His Royal Highness, Dr. Lawan Ahmed Mohammed-DIG

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By DIG Mohammed Usaini Gumel (Rtd)

With profound submission to the will of Almighty Allah, I extend my heartfelt condolences on the passing of our revered Emir, His Royal Highness Dr Ahmad Muhammad Sani II, (CON).

His distinguished reign was marked by wisdom, humility, justice, peace and devoted service to his people. May Almighty Allah forgive his shortcomings, illuminate his grave, admit him into Aljannatul Firdaus and grant him eternal rest. Ameen.

As we mourn his passing, we thank Almighty Allah for the peaceful succession to the revered throne of Gumel. It is therefore with great joy and respect that I congratulate His Royal Highness, Lawan Ahmed Mohammed, PhD, on his ascension as the 17th Emir of Gumel.
Your Royal Highness’s ascension to the throne of Gumel, continues the sacred trust entrusted to the custodians of this ancient throne.

There is no doubt that enduring traditions of unity, dignity, courage and service, has been established and preserved by the forbears, as your late father has strengthened them, through compassionate and principled leadership.

We are confident that your knowledge, experience and understanding of both our traditions and the modern world will guide the Gumel Emirate towards greater progress. We look forward to your leadership to consolidate peace and unity, preserve our cultural heritage, uphold justice and consultation, and promote development in education, agriculture, commerce, healthcare, technology, youth empowerment and community security.

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This is a time for every son and daughter of the Gumel Emirate to unite in common purpose. The strength and stability of the throne depend on the cooperation of the Royal Family, traditional titleholders, District and Village Heads, religious leaders, elders, elected representatives, professionals, farmers, traders, women, youth and all our communities, should rally round the new Emir for the common purpose of peace, unity, progress and socio-economic development of the Gumel Emirate.

At this time, our loyalty must be expressed through respect for the traditional institution, responsible conduct, sincere counsel and a shared commitment to the Emirate’s peace and development.

In a period like this we must accept to preserve the legacy of our ancestors and predecessors while building a Gumel Emirate that is peaceful, united, secure, educated, economically vibrant and responsive to every community.

Indeed, a leader serves as the heartbeat of a community. You are the heartbeat of the Gumel Emirate. The Gumel Emirate is lucky to have you as our 17th Emir, because you are such a figure, embodying wisdom, unity, and deep compassion for all residents. This tribute reflects on a legacy defined by tireless service, demonstrating how true leadership transcends mere titles to become a guiding light for generations to come.

Kindness often acts as the strongest bridge between a ruler and the people. We can only expect that this your distinguished reign as the 17th Emir of Gumel shall prioritize the well-being of the vulnerable, ensuring that voices which were often unheard find support within the palace walls.

Your Royal Highness, historical records frequently highlight leaders like the late Emir, who gained fame for generosity of spirit. I am happy to embrace the fact that you shall exhibit actions that prove authority is most effective when it is paired with genuine care for the common person.

The Gumel Emirate is lucky for the fact that beyond local boundaries, you are a master of diplomacy and peace. It’s a fact that conflicts are natural parts of human society, yet you are among the wise leaders who know how to navigate these challenges without bloodshed.

May Almighty Allah grant Your Royal Highness wisdom in judgment, patience in adversity, courage in leadership and sound health throughout your reign. May He protect you, guide your decisions and bless you with sincere, loyal and trustworthy advisers and reign, strengthen our unity, preserve our honour and bring enduring peace, progress and shared prosperity to the entire Gumel Emirate. Amin.

DIG Mohammed Usaini Gumel (Rtd) writes from his Gumel home, Jigawa State.

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