Frustrated Over Trade Wars, Dangote Offers NNPCL to Buy Over His $19 Billion Oil Refinery,Run It Better

By: Abdulwasiu Akintunde

Africa’s wealthiest man, Aliko Dangote, has expressed his willingness to transfer ownership of his multibillion-dollar oil refinery to the state-owned energy company, NNPC Limited. 

OPEN TELEVISION Naija reports that Dangote's comments is coming amid a new dispute and business war with one of the key equity partners in the refinery and an ongoing conflict with regulatory authorities in Nigeria. The 650,000 barrel-per-day refinery, which became operational last year after a decade of construction, cost $19 billion—more than double the initial estimate—and aims to reduce Africa’s biggest oil producer’s dependency on imported fuel, potentially saving 30 percent of the foreign exchange spent on imports.

"Let them (NNPCL) buy me out and run the refinery the best way they can." They have labeled me a monopolist. That’s an incorrect and unfair allegation, but it’s okay. If they buy me out, at least, their so-called monopolist would be out of the way,” Dangote said in an exclusive interview on Sunday. 

"We have been facing fuel crises since the 70s. This refinery can help in resolving the problem, but it does appear some people are uncomfortable that I am in the picture. So I am ready to let go, let the NNPC buy me out, run the refinery."

Dangote's significant investment in oil and gas, following years of success in Nigeria’s cement, salt, and sugar industries, is encountering challenges in its early stages.

Set to roll out its first petrol supply to the Nigerian market in August, the massive Dangote Refinery has been operating just above half its capacity since refining operations began in January. This is partly due to difficulties in sourcing crude from international producers. The refinery reported that these suppliers either demand exorbitant premiums or claim the product is unavailable. 

According to S&P Global Platts, NNPC, which previously had a strong relationship with the refinery before the current dispute, delivered only 6.9 million barrels of oil to the plant by May since last year. 

NNPC Limited has a longstanding supply deal with the refinery and had agreed to a 20 percent equity participation. However, the refinery noted that only 7.2 percent of this stake has been fully paid for by the deadline.

The refinery, facing a shortage of feedstock required to operate at full capacity, has turned to countries like Brazil and the US to fill the supply gap. 

"As you probably know, I am 67 years old, in less than three years, I will be 70. I need very little to live the rest of my life. I can't take the refinery or any other property or asset to my grave. Everything I do is in the interest of my country," a seemingly embittered Dangote told the press.

"This refinery can help resolve the problem, but it seems some people are uncomfortable with my involvement. So, I am ready to let go, let the NNPC buy me out, and run the refinery. At least the country will have high-quality products and create jobs," Dangote added. 

He noted that the obstacles his refinery is facing seem to vindicate friends and associates who advised him to proceed cautiously as he invested billions of dollars into the Nigerian economy. 

"Four years ago, one of my very wealthy friends began investing his money abroad. I disagreed with him and urged him to reconsider in the interest of his country. He blamed his actions on policy inconsistencies and the actions of interest groups. That friend has been taunting me in the past few days, saying he warned me and has been proven right," Dangote said.

As gathered by OPEN TELEVISION Naija, last month, the Vice President of oil and gas at the Dangote Group, Devakumar Edwin, accused the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) of allowing marketers to import dirty fuel into the country. This prompted a response from the chief of NMDPRA, Farouk Ahmed, who claimed that diesel from the Dangote refinery, as well as from modular refineries like Waltersmith and Aradel, contains high sulphur levels.

However, the sulphur content in fuel can damage vehicle engines and harm the environment by exacerbating climate change. 

"The AGO quality in terms of sulphur is the lowest as far as West Africa’s requirement of 50 parts per million (ppm). Dangote refinery, as well as some major refineries like Waltersmith refinery, produce between 650 ppm to 1,200 ppm. So, in terms of quality, their product is much inferior to the imported quality," Mr. Ahmed told journalists last Thursday.

OPEN TELEVISION Naija further reports that on Saturday, Mr. Dangote debunked this claim during a tour of the Dangote Petroleum Refinery and the Dangote Fertiliser Limited complex by members of the House of Representatives, including the Speaker, Tajudeen Abbas, and other members. In a statement, the company said the representatives observed the testing of Automotive Gas Oil (diesel) from two petrol stations alongside Dangote Petroleum Refinery and praised the company for its significant investments and contributions to Nigeria’s development. 

"The Chairman of the House Committee on Downstream, Ikenga Ugochinyere, and Chairman of the House Committee on Midstream, Okojie Odianosen, oversaw the collection of samples from the Mild Hydro Cracking (MHC) unit of Dangote refinery for testing of all the samples," the statement said.

“Lab tests revealed that Dangote’s diesel had a sulphur content of 87.6 ppm (parts per million), whereas the other two samples showed sulphur levels exceeding 1800 ppm and 2000 ppm respectively. These findings debunked claims made by CEO of the Nigerian Midstream and Downstream Petroleum Authority, Farouk Ahmed, who recently asserted that imported diesel surpasses domestically refined products. 

Ahmed had alleged that Dangote refinery and other modular refineries like Waltersmith and Aradel produced diesel with sulphur content ranging from 650 to 1200 ppm-a statement criticised by many Nigerians as a tactic to favour imported products over local ones.

OPEN TELEVISION Naija reports that Alhaji Dangote openly challenged the regulator to compare the quality of refined products from his refinery with those imported, advocating for an impartial assessment to determine what best serves the interests of Nigeria. 

On Saturday, the businessman announced plans to halt his investment in Nigeria’s steel industry to avoid being accused of monopoly. 

“You know, about doing a new business which we announced, that is, steel. Actually, our board has decided that we shouldn’t do the steel because if we do the steel business, we will be called all sorts of names like monopoly. And then also, imports will be encouraged,” Mr. Dangote concluded.