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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.

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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.”

Opinion

DSP Barau: A Resilient Senator With Advanced Mind

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Senator Barau

 

By Abba Anwar

Maintaining resilience attitude while making reference to the Deputy Senate President, Barau Jibrin, is neither accidental nor coincidence. This, without walling out any challenges.

When you take him and x-ray his unmatched and uncontested efforts in human development via creation of corridors for our youth, to have access to modern knowledge and skills, you can accept the universal truth that DSP Barau is, but a political messiah. A quintessential political leader of great substance.

Come to think of it. Apart from his singular effort in bringing a Campus of National Open University of Nigeria (NOUN) to his constituency, Kano North, years back, establishment of Federal Polytechnic, Kabo in 2022, before he even became Deputy Senate President, and the most recent effort he put in upgrading the status of Federal College of Education, Kano (FCE), to the status of Federal University of Education, Kano, among many other institutional development, his unparalleled commitment in the development of our youth, is indelible, and down-to-earth.

It isn’t in the shopping list of this piece, to view Barau from the standpoint of his political engagement, as one of the leading politicians from Kano, but rather what we are interested in, is his attachment with the life of our future leaders, the youth.

His struggle for supremacy alongside other politicians in Kano, Northern Nigeria or Nigeria as a whole, is not the concern of this write-up. His committed concern in the repositioning of our people through academic pursuit, with carefully selected fields of study, is what matters most at this juncture.

Just few days back, the Distinguished Senator sent 70 students abroad to study Artificial Intelligence, Cybersecurity and Robotic Science. At Postgraduate level. Where 65 students are males and 5 females.

Being perplexed with this life changing opportunity, in the form of Barau Scholarship Scheme, I called the effort and the process as Barau Community of Modern Scholars. Modern because, looking at the Courses of study, you may not need further explanation to tell you how this gentleman is preparing these young people against global challenges. And eventually preparing our state and the North, or Nigeria by extension, against future global face-offs.

This is visionary leadership, with foresight, exactitude, enduring engagement, meaningful productivity, patriotism, unequal fruition, increasing care, independent political will and unwavering support in all circumstances. But any expression short of this, is face-palming exercise.

Another interesting development and main reason why I have been consistent that Senator Barau’s genuine intervention in the development of our people and communities, goes beyond Kano or North, but Nigeria in general, is his recent call for applications from our youth for
Domestic Postgraduate Scholarship Programme, 2025, under the auspices of
Barau I. Jibrin Foundation (BIJF).

Where 300 students will be sponsored for 2025/2026 Academic Session at Postgraduate Level. Even the choice of institutions under this scholarship is not only a sign of seriousness, but genuine engagement for national development.

The institutions are Bayero University, Kano, Ahmadu Bello University, Zaria, University of Lagos, University of Nigeria, Nsukka, University of Ibadan and Obafemi Awolowo University, Ile-Ife. While the choice of these institutions tells us or rather speak to all, directly, what education means to the Deputy Senate President, it further gives us the clearer picture that Barau is, but, an embodiment of human development and societal growth and development, without any hesitation.

I think the entire gamut of Barau’s engagement under the scholarship schemes are the genuine human spirit in him, feeling of collective responsibility without recourse to political opponents, deeper interest in the future of our dear nation, searching for lasting solution to youth restiveness and fighting insecurity from the roots.

Just have a look at the chosen courses of study for the domestic scholarship scheme. All at the Masters level. These are Artificial Intelligence, Cybersecurity, Robotics Technology, Data Science, Software Development, Information Technology, Mineral Exploration, Hydrogeology and Environmental Geology, Oil and Gas Operations, Applied Geophysics, Metallurgical and Material Engineering, Climate Change Management, Mechatronic and Intelligence System.

Modern and global fields of study. Which can only be supported and promoted by advanced minds.

What is most fascinating under this scholarships scheme is how the process started as well as the procedures to be followed for successful take-off and implementation. I learned that, all resources to be expended under this 300 students scholarship, are kept under lock and key. Meaning they are available and ready for disbursement to appropriate quarters and successful candidates.

This scientific arrangement, I can say, tells much about the quality and how qualified are the individuals and bodies working for the Senator on this. Starting from his Chief of Staff, to all others. When you were rightly briefed about it, you may begin to wonder, whether Barau is also working with invisible elements (laughter).

His clear understanding of Malam Aminu Kano’s philosophical approach of man as the centre of development, helps him much in critically investing in our people.

To borrow a leaf from Murtala Sule Garo, Deputy Governorship Candidate of APC during 2023 election, in Kano, when he recently called on Kano political leaders, especially former governors, to kindly put heads together to purposely move the state forward, I therefore call on our politicians in the state, to kindly follow suit, irrespective of political leaning.

Well, Senator Kawu Sumaila of Kano South and Hon Abubakar Bichi, representative of Bichi Federal Constituency, in the House of Representatives, have already gone far in this direction. Kudos to them!

Anwar, former Chief Press Secretary to the former Governor of Kano State, Dr Abdullahi Umar Ganduje CON. And can be reached at fatimanbaba1@gmail.com

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Opinion

Appeal’s decision is a significant victory for Sanusi-Ibrahim Sheme

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Ibrahim Sheme

 

The Court of Appeal has invalidated the ruling of the Federal High Court against Malam Muhammadu Sanusi, allowing him to remain as the Emir of Kano. The court has directed the High Court to reassign the case to another judge for a re-trial, a move seen as more favorable to Sanusi than to Alhaji Aminu Ado Bayero.

In a detailed analysis, seasoned journalist Ibrahim Sheme argues that the Court of Appeal’s decision is a significant victory for Sanusi. “The Court of Appeal has not removed Malam Muhammadu Sanusi but invalidated the ruling of the Federal High Court against him. So he stays put as the Emir of Kano,” Sheme wrote.

Sheme points out that the Court of Appeal’s directive for a re-trial by another judge, under the practical control of the Kano State government, suggests a likely favorable outcome for Sanusi. “The Court of Appeal has merely asked the High Court to reassign the case to another judge and conduct a re-trial. This is a court that is, in practical sense, under the control of the Kano State government. What do you think the outcome will be?” he questioned.

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The journalist highlights the contrasting reactions to the judgment, noting that Sanusi’s supporters celebrated the decision, while there was no visible celebration from Bayero’s camp. “Sanusi even issued a video from Ƙofar Kudu thanking the Almighty God for his victory and asking his supporters to remain calm and cool. Did you see the other party celebrating?” Sheme observed.

Sheme asserts that Sanusi is unlikely to be removed by a court, suggesting that only another government fiat could achieve such a result. “It is my considered view that Malam Sanusi will never be removed by a court. He could only be removed by another government fiat if that would ever happen again in future,” he stated.

Reflecting on historical precedents, Sheme notes that emirs from various regions, including Gwandu, Sokoto, Muri, and Kano, were removed by civilian or military politicians, not by courts. “Recall that emirs from Gwandu (Jokolo) to Sokoto (Dasuki) to Muri (Abba) to Kano (Sanusi I and Sanusi II), etc., were not removed by the courts but by civilian or military politicians,” he wrote.

Sheme concludes that court cases related to chieftaincy matters often result in confusion and financial gain for lawyers, rather than meaningful resolutions. “All these court cases are wishful abracadabra that end up confusing the common follower, knocking the heads of social media commentators, and putting cool money in the deep pockets of lawyers and other beneficiaries while wasting our time and browsing data,” he remarked.

 

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Opinion

Badaru Abubakar: A towering figure with unwavering influence in Jigawa’s politics

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By Jameel Ahmed, PhD

It is both laughable and annoying how some few individuals think that His Excellency Alhaji Muhammad Badaru Abubakar, former Jigawa State Governor and current minister of Defence, is losing relevance in the politics of the state or that his influence and grip on the All Progressives Congress (APC) is waning. Having this insinuation is akin to thinking that a mountain can crumble by a mere hit of a worn-out hammer.

How would you, as a sane person, surmise that a figure as influential and powerful as Badaru can lose relevance in the politics of Jigawa State! As a two-term Jigawa Governor, Badaru not only redefined the politics of the state but also gave essence to governance, transforming it from a mundane routine to a purpose-driven and promising endeavour that truly served the people. Astute and empathetic that he was (and still is), he enlivened the spirit of the poor by taking social amenities to them, thereby placing the state on a promising trajectory of sustainable development.

In what appeared to be a digression from what most politicians considered as norm, Badaru, on assumption of office, vowed to complete the projects initiated by his predecessor. And in a manner that symbolised “walking the talk”, he completed all the projects and initiated others and saw them to the finishing line before the expiration of his tenure. When many would luxuriate on the laps of power and get intoxicated by its grandeur, my Boss remained focus, determined and committed to the welfare of the good people of Jigawa State.

As his loyalist and staunch supporter, one of the numerous lessons I have learnt from him is that of speaking less but doing much. When he promises, rest assured that he has it all planned and that he will fulfill the promise. But here, one wouldn’t deny the fallibility of humans, after all it is an inherent ‘trait’ created in man. But comparatively speaking, Badaru has, as a Governor, proven his worth, and still doing ditto as Nigeria’s Minister of Defence. We are all living witnesses to how he is straining his nerves in securing the country and giving hopes to Nigerians.

His government, all-inclusive that it was, also carried the youths along. It was during his days as the number of citizen of Jigawa that the state witnessed a sharp shift from the approach of having the elderly people taking the centre stage and dominating key positions in government. One wouldn’t err to say that Badaru was the first governor in Nigeria to have given special recognition to the youths. From graciously approving key appointments to the youths, he unprecedentedly paved way for them to contest and win chairmanship election across the local government areas of the state.

He believed that by bringing fresh energy into the system of governance, more innovative solutions, creative ideas and effective policies could be harnessed to drive meaningful change and positive development to the good people of the state. And he was right! The youngsters he drew closer to him and availed opportunities to them didn’t disappoint him. For example, the council chairmen that served during his time had all done wonderfully well as they executed key projects that are critical to the development of their respective local government areas.

But alas, their tenures were cut short with the coming of the present Governor who, ironically, was also a protégé of Badaru. After making him a Commissioner and a member of the state executive council, Badaru later chose Umar Namadi to be his running mate during the time he sought reelection. Badaru, unlike many other governors who wouldn’t allow their deputies to do well lest they become strong and powerful, gave all he could to Namadi, extending every favour to him.

Badaru didn’t stop at that, he went further to clear the grounds for Namadi to succeed him, a rare privilege only few can extend to their deputies. He anointed him, stood by his side and gave his all to ensure his (Namadi’s) success at the poll. Every observer and keen follower of political happenings in Jigawa, if they’re sincere, would tell you that the contest, even at the primaries, was a heated one as there were many aspirants eyeing the exalted governorship seat. But with Badaru’s help, Namadi was able to scale through, even when a section of the state’s population was having misgivings about his competence and capacity to deliver.

And that was how the current governor came to be in the position he occupies now. But in a bizarre turn of events, those close to him began to disparage his predecessor, falsely accusing him of not providing adequate support for the current governor. But this is a baseless accusation and a wanton lie; a delusional statement only an ingrate person with myopic mind could make. As a political gladiator and leader of the APC in the state, Badaru could have anointed another person if he had wished, but he chose to repose his trust on Namadi.

Therefore, to think that Baba Badaru’s influence is waning in the politics of Jigawa state is both absurd and naive. He has built a lasting legacy and a strong network of supporters who are still committed to his ideals and steadfast in their allegiance to him. For the records, the three former council Chairmen (namely, Musa Shu’aibu Guri, Abdulkadir Bala Umar T.O., and Uzairu Nadabo) who served during Badaru and recently appointed by governor Namadi were never staunch loyalists of the Defence Minister, neither are they die-hard APC members. They are only political renegades who defected from the People’s Democratic Party (PDP) to the APC for selfish reasons.

Badaru’s support-base, his relevance and influence in the political space of Jigawa State are still intact. The appointment of the three former council Chairmen as Special Advisers to the current governor did not and will not affect Badaru’s influence. These are people who severed ties with Badaru immediately after he left office and never visited him even after his ministerial appointment. How then can one with a clear mind suggest that their appointment as Special Advisers by the current governor would erode the relevance and wane the influence of His Excellency Muhammad Badaru Abubakar?

Baba Badaru is still Jigawa’s political father and the state’s APC leader whose influence is as formidable as it is far-reaching. He brought APC to the state, nursed and nurtured it to a promising height that shaped the political landscape of the state and sheltered the good people of Jigawa. We are with him. Our allegiance is still intact. So is that of the remaining 21 former council Chairmen whose tenures were cut short at a time when they were executing impactful projects to their people, following the footsteps of our hero, a beacon of hope and an astute leader whose political sagacity is the envy of many. More wisdom to you, His Excellency Muhammad Badaru Abubakar!

Jameel Ahmed, PhD
is a Member, Badaru-Support Organisation.

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