By Paul Ejime
After much ado, the Nigerian National Petroleum Company Limited (NNPCL) on Sunday 15th September 2024, confirmed lifting fuel from the Dangote Refinery for sale to long-suffering consumers. Many are still wondering, why all the delay, insincerity, avoidable controversy, allegations and counter-allegations in the first place.
On Tuesday, the 3rd of September 2024, Nigerians were supposed to be jubilant that their country would shed decades of an embarrassing nickname of an oil-producing nation that shamelessly imports refined petroleum products coupled with inexplicable shortages.
The Lagos-based Dangote Refinery, the world’s largest integrated private oil refining project worth about US$20 billion with a production capacity of 650,000 barrels per day, rolled out its refined Premium Motor Spirit (PMS) or petrol on that day.
However, the anticipated joy was cut short even before it started. The government in its wisdom chose the same day to announce another increase in the pump price of petrol, adding to the economic hardship sweeping across Africa’s most populous nation, which witnessed nationwide street protests for 10 days in early August.
From less than 200 Naira per litre before President Bola Tinubu assumed office in May 2023, petrol pump prices went up more than three-fold, first to 617 Naira and then to 855 Naira per litre from 3rd September 2024 (1,600 Naira=US$1).
The oil sector provides about 95% of Nigeria’s foreign exchange earnings and 80% of its budgetary revenues. Given the erratic public electricity supply, petrol powers the Nigerian economy, transportation of persons and goods and local industries. With the country’s high unemployment rate and the government as the largest employer of labour, self-employment also depends on the availability of fuel.
The infamous “Nigerian factor,” a euphemism for the combination of the enablers of dysfunctionalities including a cesspool of corruption, mismanagement, incompetence, inefficiency and nepotism, has made the country’s four state-run oil refineries non-operational.
President Goodluck Jonathan’s government issued the first licence to a private refinery in 2010 and by March 2021. the number had risen to 23, including the Dangote group which got its licence in 2014 as part of efforts to free Nigeria from the stranglehold of the “oil Cabal,” which has continued to make a kill from the importation of refined oil products.
The Cabal are powerful individuals, some in government, and profit-driven oil marketers who prioritise profits over Nigeria’s interests, with the government running the industry as a monopoly. Working hand in glove with some public officials the Cabal and their collaborators have ensured that operations and transactions of Nigeria’s oil industry, up-stream and down-stream are governed by conspiratorial opacity and secrecy.
To compound the mystery, several Nigerian presidents, including those from the return to civilian rule in 1999 after prolonged periods of military dictatorship, have combined their exalted office with the petroleum affairs portfolio as is currently the case under President Bola Tinubu’s administration. Junior ministers appointed to the petroleum ministry only play second fiddle to the almighty presidents who wield sweeping political and economic powers with unlimited access to oil money and without accountability. For instance, despite producing no oil, the failed state-owned refineries still gulp millions of dollars annually in purported workers’ remuneration and endless maintenance bills.
Nigeria is a member of the Organisation of Petroleum Exporting Countries (OPEC), however, the rot in the domestic industry has ensured that the country does not meet its OPEC production quota.
The trust level is so low that many do not believe or have confidence in the government. The authorities’ reasons for Nigeria’s failure to meet its OPEC quota, include smuggling and oil theft, which do not cut the ice among the sceptical population, who also question the domestic oil consumption figures often quoted by the government.
Corruption has unleashed outlandish tales on Nigerians, some involving animals such as snakes, monkeys and rats swallowing millions of Naira. The oil industry has its share, such as oil tankers reportedly disappearing on the high seas. Beneath the surface is the deal-making by marketers/suppliers, some accused of engaging in round-tripping or rotation of empty oil tanks and getting paid as if they brought in products, with the regulators looking the other way.
The big elephant in the room is the successive governments’ claim of oil subsidy payments, which they claim were necessary to make petrol affordable and accessible for Nigerian consumers. Neither of these has happened.
While diesel and kerosene have been deregulated, PMS/petrol remains a hydra-headed monster difficult to tame because of the benefits to the Cabal and various interests involved. Oil subsidy in Nigeria is considered a phantom scheme. What is paid, by whom and to whom is not for public knowledge, yet billions of dollars are taken out of the country’s treasury.
As justification for the increase in the pump price of PMS/petrol, President Tinubu told Nigerians in his inaugural speech “Subsidy is gone,” without any explanations on the alternatives.
Subsequent increases in the pump price of petrol and other government economic policies including the floating of the local currency, the Naira, have left Nigerians reeling in cost-of-living pains with choking spiralling inflation and devalued purchasing power.
After the August #EndHunger and #EndBadGovernance national protests, the Tinubu government insists that the pains are temporary, promising that its economic policies will yield positive results in the long term.
The hypocrisy and unnecessary controversy around the Dangote Refinery, have led to allegations that some powerful interests behind the continued importation of refined petroleum products are out to frustrate Africa’s richest man and others like him trying to seal the leaky pipe of corruption, draining Nigeria’s scare foreign exchange revenue.
First, was the inexplicable decision to deny the refinery of local crude oil, which forced it to resort to import. This was followed by the allegation that the petrol produced by the refinery was of inferior quality.
After much debate, the NNPCL on the directive of President Tinubu is to begin the sale of crude oil in Naira to the Dangote refinery from the 1st of October 2024. It is also reported that the NNPCL is now buying PMS from the refinery in Naira for sale through marketers, even though both sides do not seem to agree on the price.
One key question – was the increase in the pump price of petrol on the 3rd of September a deliberate government action to pre-empt the Dangote refinery’s rollout of PMS? If so, what was the end game, and could the increase not wait until both sides agreed on a pump price?
Why take Nigerians through unnecessary chaos, artificial scarcity and long queues at filling stations with petrol selling for up to 1,400 Naira a litre or more in parts of the country, amid a booming black market? If petrol is deregulated like diesel and kerosene as claimed by the authorities, why would Dangote refinery sell to the NNPCL and not directly to the final consumers?
When will Nigeria’s oil industry be transparent? Even the Lagos land where the Dangote refinery is located has not escaped controversy. While industry sources claim that US$100 million was paid for the land, some state government sources say only US$3 million was the amount paid.
To Alhaji Aliko Dangote, President/Chief Executive of Dangote Group, the largest conglomerate in West Africa with a presence in 17 African countries and the first Nigerian company to join the Forbes Global 2000 Companies list, the refinery project is only part of the diversification of his vast business empire. As an experienced mogul who began business very early in life with a loan from his uncle, Dangote 67, is no stranger to the difficulties of doing business in Nigeria, even though his critics claim he had been enjoying preferential concessions from successive administrations.
Even so, the Kano State-born billionaire from northern Nigeria has made no secret of his frustrations with the controversy trailing the refinery project. The stress has taken its toll with his visible premature grey hairs. Dangote has disclosed being warned by a colleague against building the refinery in Nigeria but may not have expressed any regrets about such a huge investment in his country.
However, the Dangote refinery experience raises critical questions about Nigeria’s sincerity and readiness to attract local or foreign investments. As a philanthropist, who supports humanitarian initiatives, and whose group is arguably the largest private sector employer of labour in his country, Alhaji Dangote is contributing to build a better Nigeria and Africa. In 2014 he endowed more than US$1.25 billion to scale up the work of his Dangote Foundation in health, education and economic empowerment. Dangote needs no validation as a successful businessman in Nigeria, Africa or globally, and he can invest his money wherever he chooses.
It would be tantamount to criminal sabotage for greedy, insensitive and profit-driven Nigerians to use their privileged positions to force philanthropists such as Alhaji Dangote to abandon Nigerians, especially the poor and needy already dealt a devastating blow by bad governance, mismanagement and corruption. The World is watching!
*Ejime is an Author, Global Affairs Analyst, and Consultant on Peace & Security and Governance Communications
