Governance: Dangote Refinery, Aliko Dangote in the Eye of the Storm

Governance: Dangote Refinery, Aliko Dangote in the Eye of the Storm

He is more widely known as an astute businessman, never involving himself overtly in the murky waters of politics. He is what they call AGIP in Nigerian parlance, meaning Any Government in Power. But all that may have changed last week, when Africa’s richest man, Alhaji Aliko Dangote threw his hat into the ring in

He is more widely known as an astute businessman, never involving himself overtly in the murky waters of politics. He is what they call AGIP in Nigerian parlance, meaning Any Government in Power. But all that may have changed last week, when Africa’s richest man, Alhaji Aliko Dangote threw his hat into the ring in defence of his $20 billion investment in Nigeria’s oil sector and his reputation.

Dangote Refinery Plant

This came on the heels of several allegations against Alhaji Dangote who was accused by Nigeria’s petroleum regulatory body, the NNPCL of trying to establish a monopoly, manipulate product prices, and producing substandard products. “Dangote is requesting that we should suspend or stop the importation of all petroleum products … and that is not good for the market because of monopoly,” said Farouk Ahmed, CEO of Nigerian Midstream and Downstream Regulatory Authority NMDPRA.

He alleged that the Dangote refinery company approached the regulator to force all dealers to buy diesel through the refinery alone since the refinery is in a free trade zone where it is not expected to pay taxes to Nigeria and can only sell its products as exports to the local markets if it wants to bring products into the county. This suggests the creation of a monopoly.

Dangote refinery is reputed to be the biggest in Africa and has been touted by regulatory authorities as a game-changer that would end Nigeria’s dependence on imported petrol. But Africa’s biggest oil producer’s objectives are being impeded by oil theft and chronic corruption by suspected insiders in the regulatory agency working with external moneybags, constituting themselves into a cabal.

In response to the NNPCL’s salvo, Alhaji Dangote opened a can of worms alleging that “Some of the NNPC people and some of the traders have opened a blending plant somewhere off Malta…I’m not scared, I will fight head on”, he insinuated that that could be the root of his problem. Nigerians are, divided on the plight of Dangote. While a section believes what has been alleged against him and feels no pity for his treatment another feels he is being treated unfairly. Both sides are, however, more interested in who are those stealing Nigeria’s crude oil daily. They want Alhaji Dangote to name the NNPC officials involved. They want him to unveil the cabal, those who have stolen our national wealth and used it to establish a blending plant in Malta.

To Nigerians, this was like a bolt from the blue and they are enjoying the drama and praying it yields positive fruits towards solving part of the problem in the oil sector. Dangote Refinery had been perceived as a hope-giver, believed to be the antidote to perennial fuel shortages that have plagued every regime since the seventies. Alhaji Dangote had taken the risk of investing in a refinery sector where Nigeria has four refineries that have been run aground and could not be revived by successive governments since a return to democratic rule in 1999.

He has addressed press conferences and granted interviews to protest the NNPCL’s accusations and defend his reputation, defending all allegations most profusely. He went further to invite lawmakers and interested Nigerians to inspect his plant where the products are produced and tested. With its incursion into diesel production, there have been dividends, Dangote refinery helped to slash the price of diesel by about N600, but more importantly, it helped to stablise the market.

Alhaji Dangote lamented his plight stating in a pitiable voice that he did not receive any incentive from the Nigerian government regarding the refinery. He said for the land where the facility is located, he paid a whopping $100 million to his host Lagos State government. Showing signs of frustration and regret for the investment, he announced simultaneously that he was calling off plans to invest in Nigeria’s steel industry.

Piqued by Dangote’s plight and lamentation, the Nigerian House of Representatives on Monday began an investigation into the alleged importation of contaminated fuel into the country, part of efforts to resolve issues causing a rift between an oil refinery owned by Africa’s richest man Aliko Dangote, and the industry regulator. Dangote had declared in his fit of anger that most of the diesel the NNPCL imports is of low quality and causing damages to vehicles and equipment.

Minister for Petroleum Resources Intervenes
Top Level Meeting in Progress

The government through the Ministry of Petroleum Resources had intervened in the matter. After a meeting on Monday, Sen. Heineken Lokpobiri, Minister of State for Petroleum Resources wrote: “I convened a high-level meeting with top executives from Dangote Group, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Nigerian National Petroleum Corporation Limited (NNPC) to address the ongoing issues surrounding the Dangote Refinery.

“The meeting was a collaborative effort to find sustainable solutions to the challenges affecting the refinery. All parties involved demonstrated a strong commitment to proactive problem-solving and expressed their gratitude for the leadership and timely intervention provided.

“I emphasized the critical importance of cooperation and synergy among all stakeholders to ensure the success and optimal performance of Nigeria’s oil and gas sector, which is essential for the country’s economic growth and energy security”.

The meeting brought together industry giants, including Aliko Dangote, Chairman and CEO of Dangote Group, Mr. Farouk Ahmed, CEO of Nigerian Midstream and Downstream Regulatory Authority NMDPRA, Gbenga Komolafe, CEO of Nigerian Upstream Petroleum Regulatory Commission and Mele Kyari, CEO of Nigerian National Petroleum Company Limited NNPCL.

Dangote’s Frustration
Aliko Dangote appears utterly frustrated having invested his whole life into this refinery. Building something of pride for Africa and raising Nigerians’ hope that the problem of fuel scarcity will become past tense.

Nigerians are wondering why the regulators cum competitors don’t want the refinery to commence operations. Why demarket a company you should be promoting? Reasons why it cannot start operating they cannot fathom. Analysts opine that the problem may not be unrelated to that of endemic corruption in the country, a major disincentive to investment. “This is a very bad situation for investors that are willing to come in. If the indigenous companies are afraid to operate in Nigeria, what more of foreigners?”

Ayo Aluko-Olokun
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