BusinessDefying Dream-Killers, Dangote Battles Nigeria’s Agony of Local Refining

Defying Dream-Killers, Dangote Battles Nigeria’s Agony of Local Refining

June 10, (THEWILL)- With refined petroleum products beginning to flow from the newly completed 650,000 bpd Dangote Refinery in Lagos, it can be said that Africa’s richest businessman and President, Aliko Dangote, has achieved his goal of defying Africa’s dream killers. He has also, by extension, helped to fill an economic vacuum created over the years by the persistent lack of functional local refineries in Nigeria.

In a recent interview with CNN and posted on the Business Elite Africa X handle, Dangote said he was determined to go ahead with the project amid discouragement from people who he considered were out to kill his dream through discouragement.

He however admitted that he would not have ventured into the project if he had known what he knows today, having had some challenges.

“If I’m going to do this now. I’m going to do it better because I’ve learnt from experience.

“But if I had known what I was going to go through, I wouldn’t have tried it. People warned me against going into this, but I thought they were only trying to discourage me,” Dangote said

According to Dangote, some other countries in Africa have been trying to build refineries, but in vain, due to the challenging environment. He said this was responsible for lack of new refineries on the continent in the past 35 years.

Noting that some people are benefitting from the importation of petroleum products in Africa, he said, “There has not been a new refinery in the past 35 years, and the reasons are lack of funds, political will and also people who are benefitting from this whole stuff of importing petroleum products into Africa. They are actually discouraging governments from building refineries.

 

“They (government) do not have the funds to build new refineries because they do not have strong banks and international banks would not support anything like it.”

With the commissioning of Dangote Refinery in May 2023 by former President Muhammadu Buhari and the commencement of production, Dangote has succeeded in his vision of building the largest refinery in the world.

The Refinery confirmed that it had received crude supply from NNPC, while international oil companies were directed to supply crude to it.

THEWILL recalls that on January 12, 2024  Dangote Refinery announced that it had officially commenced production. However, THEWILL findings revealed that commencing actual production would not be earlier than the second quarter because of the complex process involved in starting up a new refining facility.

President of the Senate, Godswill Akpabio on Saturday commended the Chairman of Dangote Group, Alhaji Aliko Dangote, for successfully completing the 650,000 barrels per day (bpd) Dangote Petroleum Refinery, describing the facility as the ninth wonder of the world.

Saluting Dangote for completing the largest single train refinery in the world in a record time, the Senate President said Dangote deserved all the accolades for the feat.

Akpabio came hard on those who were skeptical of the completion of the refinery, describing them as dream killers.

Akpabio, who led the leadership of the 10th Senate on a tour of the refinery in Lagos, said Dangote’s detractors had all been silenced and that indeed, previous governments in the country had been put to shame with the completion of the project.

Senator Akpabio was, however, silent about the unending repairs of the Nigerian refineries, especially the Port Harcourt Refinery which has entered the second quarter of 2024 after missing the December 2023 target.

The Federal Government had, through the Nigerian National Petroleum Company Limited (NNPCL), emphatically assured that the facility would resume production in December.

The “commitment” was extracted from the government after organised labour had embarked on a nationwide strike over the hardship that occurred from the removal of petrol subsidy. It also   accused the government of pushing the refinery repairs to the back burner.

The four local refineries in Nigeria, including the two in Port Harcourt, had stopped operations in 2019 yielding the country to full importation of its petroleum requirements.

This has drained the nation’s resources extensively as it spent the bulk of its oil revenue on “subsidy” while it also suffered huge losses from massive oil theft which the NNPC put at $10 billion in 2022 alone.

As a result, the NNPCL made zero remittance to the Federation Accounts Allocation Committee (FAAC) in 2022 due to challenges arising from oil theft and payment of “under-recovery,” a euphemism for subsidy.

In a dramatic change of events, the Federal Government in December confirmed the “commencement of operations” at the Port Harcourt Refinery. It announced that the facility commenced operations on December 20, 2023, as the first phase of work at the plant had been completed, adding that refined petroleum products would start flowing from the refinery after Christmas.

The government had earlier in the year repeatedly stated that the Port Harcourt refinery would begin operations before the end of 2023. The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, who led members of the Refinery Steering Committee to inspect the facility, congratulated the Nigerian National Petroleum Company Limited and Nigerians in general for the feat.

“In our quest to ensure that this refinery is re-streamed to continue to deliver value to Nigerians, we made a promise that we will reach a mechanical completion of phase one of the rehabilitation project by the end of December and get the other plants running in 2024. Today, we have kept those commitments,” a statement quoted NNPCL Chief Executive Officer, Mele Kyari as announcing during a facility tour of the plant.

However, industry experts and inner members of the Refiners have countered the claim by NNPC, maintaining that the refinery was far from resuming actual production. Among these is Engr Alex Ogedegbe, a former Managing Director of Port Harcourt and Kaduna Refineries at different times, who explained that the so-called fulfilled promise was a hoax.

“From the analysis of the information published so far, it does not appear that the refinery can start any production in the foreseeable future,” Ogedegbe disclosed in a statement, adding, “It is also noteworthy that the main contractor, TECHNIMONT did not promise any mechanical completion or production start-up dates.”

The Group Managing Director of NNPC, Mele Kyari, had announced April 2024 as a new date for the Port Harcourt refinery to resume operations in April.

In a statement, the NNPCL chief explained that mechanical works, again, had been completed on the facility which received over 450,000 barrels of crude, following delivery from active lines.

THEWILL recalls that the Senate. under the leadership of Akpabio, had on October 24, 2023 constituted an ad-hoc committee to investigate all contracts estimated at over N11.35 trillion awarded for the rehabilitation of the four moribund refineries in the country.

This followed a motion brought by Senator Sunday Karimu on the unending repairs of the nation’s refineries, despite the huge resources invested in fixing them.

Karimu said, “We are concerned that the Federal Government of Nigeria has carried out rehabilitation projects in Port Harcourt Refinery Company (PHRC) over a period of seven (7) years from 2013-2019 at an estimated cost of N12,161,237,811.61. In addition, on the 18th March 2021, a rehabilitation contract was executed between NNPC/PHRC and Tenenimont SPA at a Lump Sum of $1,397,000,000.00, about N75 billion naira amidst global public criticism, no result has been achieved.

While Nigerians were still expecting the outcome of the Senate probe of the refinery repairs, the federal lawmakers on February 20, disclosed that the upper legislative chamber had resolved to probe how the N30 trillion Ways and Means loans of the Central Bank of Nigeria was obtained and spent by the Muhammadu Buhari Administration.

Meanwhile, unconfirmed reports revealed that the government engages in ‘secret’ payment of subsidies amounting to over N17 billion daily, following the rise in price of oil at the international market, which the government denied until recently. It was revealed that a provision of over N5 trillion had been made for fuel subsidy in 2024.

About the Author

Sam Diala

Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.

 
Sam Diala, THEWILLhttps://thewillnews.com
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.

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