The politics and economics of Dangote refinery

Aliko Dangote deserves our collective support and official encouragement. I told him the day I visited his plant that he’s “an authentic African hero and a real icon”, and I meant that from the bottom of my heart. As an investor and businessman, he’s succeeded where our government has failed. He has built a huge business empire consisting of manufacturing, oil and gas, agriculture, fertiliser and petrochemicals and will earn more than Nigeria next year. For the 2025 FY, the Dangote Group is expecting to gross a total revenue of $30 billion, with the refinery contributing $19.5b; fertiliser, $2.5b; oil and gas, $1.5b and cement $6b.

Nigeria is projected to earn about $22 billion revenue from crude oil exports next year (Given the huge oil theft from the Niger Delta, the bulk of Nigeria’s oil production is currently coming from the deep-water terrains which are operating under the PSC fiscal regime. Therefore, with the projected 1.4mbpd, average crude oil price of $70 and a sharing ratio of 55% to Nigeria and 45% to the operators, the expected $22 billion revenue is inadequate for a country of over 200 million people. Nigeria is indeed a poor country).

The $30 billion inflow next year to DIL will undoubtedly have salutary impacts on our exchange rate. Is this why some people are bitter against the man? He has repeatedly stated that the oil mafia is more powerful and dangerous than the drug cartel. The Tinubu administration should therefore save the refinery from the mafia and protect it as a national asset.

Every educated adult Nigerian knows that our country is run on the basis of ethnicity, religion and partisan politics and is governed largely by incompetent fellows who are obsessed with pursuing self-interest. No matter how well-meaning a government official appears, he’s driven by an innate urge to promote his personal interests above the good of the people.

The relentless pursuit of self-interest and the absence of love for the country is at the root of our national problems. The recent statement credited to the chief executive of Nigerian Midstream and Downstream Regulatory Authority (NMDRA), Engr. Farouk Ahmed, typifies a good example of how personal interest trumps national development.

He spoke to the press recently and stated, to the shock of the nation, that Nigeria should never discontinue the importation of refined petroleum products even if the Dangote refinery has the capacity to satisfy domestic consumption because reliance on the refinery is “a threat to energy security”. Farouk also alleged that the diesel produced from the refinery is below standard in terms of sulphur content.

It is apposite that Dangote himself has categorically denied Ahmed’s allegations of producing substandard products and has assured that the sulphur content of his diesel has been falling steadily to meet the country’s requirements. The business guru went further to provide evidence that NMDRA had earlier certified its laboratories that have consistently tested his products.

There is no doubt that Engr Ahmed is driven by self-interest in audaciously pushing for continued importation of products, rather than supporting domestic production. A lot of NNPC and regulatory officials are making quick bucks from the importation of petroleum products and they do not want to let go. They’ve grown too rich in the corrupt and opaque oil importation and oil swap business; so much so that they don’t even want government-owned refineries to work.

They profit from endless turnaround maintenance programmes that produce no results, yet those comatose refineries have the full complement of workers receiving salaries and other emoluments year after year. Farouk is not bothered that the country has lost billions by exporting crude oil and continuously importing refined products. All that matters to these people is their bank accounts.

A regulatory authority that talks down on domestic producers and denigrates in-country production efforts in preference for continued importation is either incompetent or corrupt, or both. No matter how wobbly domestic producers are; or irrespective of the nascency of the level of domestic production, a regulator’s main objective should be to offer guidance, an enabling environment, incentives and encouragement to help the operators succeed.

That’s how Taiwan moved from being a producer of inferior goods to becoming a major producer of chips and semiconductors; Bangladesh moved from being the poverty capital of the world in the 1980s to being a major producer and exporter of clothing, even though the country has no single cotton field. Vietnam moved from being a producer of tennis shoes to becoming a major producer of computer chips. The chaebols of South Korea grew due to government’s support. I don’t even want to mention China!

Strong regulators help in growing the economy. The Central Bank of Nigeria, for example, will never get to the press and announce names of weak banks in the country, and threaten to close them down or invite foreign banks to take over. It is also the reason NAFDAC, SEC, NCAA or any other regulators do not make silly statements in the media, lampooning the operators in their industry. A good regulator works with the operators to meet minimum standards. They don’t create panic and embarrassment.

The national outrage that trailed Farouk Ahmed’s statements is a measure of how resentful Nigerians are of endless fuel importation, the endemic corruption in and around the NNPC, its subsidiaries and industry regulators. Their inability to revive our moribund state-owned refineries has made Nigeria the laughingstock of the world and the butt of all jokes at drinking pubs. I call on President Tinubu to sack Engr. Ahmed right away and save the country from his embarrassing indolence.