Dangote Refinery: The need for forthright regulators and impartial tourists, By Bosun Adetiloye

Lagos State Governor, Babajide Sanwo-Olu; Senate Leader, Senator Opeyemi Bamidele; President/CEO, Dangote Industries Limited, Aliko Dangote; Senate President, Senator Godswill Akpabio; Vice President, Oil & Gas, Dangote Industries Limited, Devakumar Edwin during the National Assembly delegates visit to Dangote Petroleum Refinery, Petrochemicals and Fertiliser Plant in Lekki, Lagos on Saturday, 8 June, 2024.

Granted that local businesses like Dangote Refinery, which are of strategic benefit to Nigerians, should be protected from being overrun by foreign business entities, it does not excuse it from complying with provisions of extant by laws regulating its operations.

With exactly a week to go in his presidency, President Muhammadu Buhari on 22 May, 2023, inaugurated the Dangote Refinery, a 650,000 barrels per day facility reputed to be the largest single-train petroleum refinery in the world. There was pomp and circumstance as the refinery reportedly came on board, but as it would later turn out, Buhari might have been goaded into inaugurating an uncompleted refinery. It might also be that the former President was just too eager to have his name inscribed on what was perceived as a legacy project.

That action would subsequently set the stage for events that have called to question a number of issues about the Refinery. To begin with, the promise made by Dangote during the inauguration of the refinery to the effect that the plant would commence in August 2023 did not materialise simply because the refinery wasn’t ready, contrary to the story put out by the Buhari Presidency and Dangote himself.

Production of diesel and aviation fuel only commenced in the first quarter of 2024 after the refinery had, between December 2023 and January 2024, received six cargo supplies of crude.

We should recall that Dangote, while announcing the commencement of production of the two products, thanked President Bola Tinubu and the two regulatory agencies in the Upstream and Midstream and Downstream sectors of the Nigerian petroleum industry as well as the Nigerian National Petroleum Company Limited (NNPCL) for their support.

As he put it: “We thank President Bola Tinubu for his support and for making our dream come true. This production, as witnessed today, would not have been possible without his visionary leadership and prompt attention to details. His intervention at various stages cleared all impediments thereby accelerating the actualisation of the project. We also thank the NNPC, NUPRC and NMDPRA for their support. These organisations have been our dependable partners in this historic journey.”

It is important to note the comments of Dangote as it was interesting to see him turn around a few months later, and refer to the same NNPC Limited and the NMDPRA as unpatriotic entities working against his refinery and Nigeria. What is considered as Dangote’s histrionics began when he accused the NNPC Ltd and International Oil Companies (IOCs) of refusing to sell crude to him. He said they preferred to sell to companies operating outside Nigeria. However, his allegations was laid bare in the revelation that both the NNPC Ltd and the IOCs already had crude supply agreements predating even the setting up of Dangote Refinery, which could not be breached without exposing them to litigation, Dangote appeared to change tactics. He next accused the NNPC Ltd of setting up a blending plant in Malta from where they import poor quality fuel into the country.

Some discerning industry players were knowledgeable enough to regard the accusation as a red herring to distract from the real issues. One of these was that the NMDPRA had alerted Nigerians to the high sulphur content of diesel produced and sold by Dangote Refinery.

In addition, the NMDPRA said Dangote had lobbied government to ban importation of petroleum products since his refinery was already producing them. According to Engineer Farouk Ahmed, CEO of NMDPRA: “Dangote is requesting that we suspend or stop importation, especially of AGO and DPK, and direct all marketers to his refinery. That is not good for the nation in terms of energy security, and it is not good for the market because of the monopoly.”

Tourist Site?

Realising that his allegations against the NNPCL and NMDPRA did not sway many Nigerians to his side, Dangote turned to leading public officials in parliament, non-state actors in the civil society organisations, and the media to procure essential validation and association. To achieve this objective, he seemed to have turned the refinery, which ought to be striving hard to meet up its production target, into a tourist site where these leading public figures visit and eulogise his ingenuity. Top on the list of visitors to the refinery has been Godswill Akpabio, the president of Nigerian Senate, who led a cast of ranking senators to the refinery.

While touring the site, Akpabio said: “They told us in Abuja that Dangote Refinery is a farce but we have come here and seen for ourselves that the refinery is alive and running. Dangote has put to shame a lot of people. They are wondering how it will be possible for a single individual to accomplish what a whole nation could not accomplish; what 240 million people could not maintain; what a continent could not do and then one person will build 650,000bpd project.

“They keep wondering how one person can succeed where nations have failed; where continent has failed. But Dangote has done it. It is highly commendable. We came to see the refinery because we in the current senate believe in the Nigerian dream. We didn’t come as a doubting Thomas but we came because we believe the project, we came to rekindle the hope of Nigerians and the Nigerian’s can do spirit.”

Akpabio also reportedly said: “Mr Dangote, I pity you a lot because even your friends will envy you simply because they will keep wondering how can you succeed when nations, and continents have failed? Now that we have seen for ourselves, we are here to announce our own endorsement of this major project. It is also shocking to see that we produce sufficient fertilisers for Nigeria and enough to be exported.”

Less than a month after Akpabio and company visited, Tajudeen Abbas, speaker of the House of Representatives, led his colleagues in the House on another visit to the Refinery. Less effusive in his adulation of Dangote, Speaker Abbas nonetheless eulogised the businessman. “Dangote Refinery symbolises not only the strength and potential of Nigerian industry but also the dedication and vision of one of our most esteemed business leaders, Mr Aliko Dangote. As we tour this state-of-the-art facility, it is impossible not to appreciate the significant contributions that Dangote Group is making to our economy,” he stated.

It was not only our parliamentarians who have been mobilised on the excursion to the refinery. A coalition of Civil Society Organisations, many of which found it a “worthy” venture to visit the Dangote Refinery on what seemed a pilgrimage to achieve a united voice of validation for the facility. The CSOs, now pushing to outshine the earlier visitors, yet arrogated to themselves the power to monitor crude supply compliance from the NNPC to the Dangote Refinery.

Next in line was a team of media executives across the print, electronic as well as online media professionals, including bloggers and content creators. The facility also hosted interest groups from the Niger Delta under the banner of Host Communities of Nigeria Producing Oil & Gas. As these leading Nigerians visited the refinery to pay homage, the late playwright, Ola Rotimi’s adage that when the mother cow eats grass, her young ones watch her mouth, proved very accurate as a coalition of youths groups calling themselves the Lagos Advocacy Group, Lekki Empire Advocacy Forum, and Yoruba Youth Advocacy Forum, joined the Dangote admiration community.

Speaking on behalf of the groups, Yakubu Eleto, Convener of the Lagos Advocacy Group called on traditional rulers in the South-West to rally behind the Dangote Refinery because it is located in Yorubaland.

Heading South?

It is instructive to note that while the leadership of the National Assembly, the CSOs, the media and others are falling over one another to sing Dangote’s praise, those with a keen eye for business are taking a different view of things. This week, Fitch, the global rating agency downgraded the Dangote Industries Limited, due to what it described as the “significant deterioration in the group’s liquidity position and uncertainty related to its ability to refinance maturing debt related to the syndicated loan raised to finance construction of Dangote Oil Refining Company (DORC).”

The agency said further delays by the Dangote group in meeting the funding requirements would significantly increase the likelihood of financial restructuring or default and lead to a further rating downgrade.

According to Fitch: “The downgrade reflects significant deterioration in the group’s liquidity position following lower than expected disposal proceeds, operational and financial underperformance compared to our prior expectations, also affected by local currency devaluation, and lack of contracted backup funding to repay its significant debt facilities maturing on 31 August 2024.

“We view the lack of DIL’s audited accounts for 2023 as a corporate governance issue. The earnings before interest tax depreciation and amortization (EBITDA) contribution from DORC has (sic) been far below our previous projection.”

According to Fitch, “DIL has immediate debt servicing requirements related to the syndicated loan raised to finance the construction of Dangote Oil Refining Company (DORC).”

Dangote Refinery has a production capacity of 650,000 barrels per day (bpd) of refined oil products, which will be sold in both the Nigerian domestic and international markets. Reports indicate that during the First Half (1H) of 2024, the refinery operated at around 50 per cent capacity and produced between 325,000 bpd to 375,000 bpd.

Significantly, Fitch noted that the gloomy situation the Dangote group had found itself was pushing it to consider selling of 12.5 percent of its stake in the refinery. In 2021, NNPC Ltd acquired a 7.25 percent stake in the Dangote refinery’s project entity for $1.0 billion, with an option to purchase the remaining 12.75 percent stake by June 2024. “Since the option has not been exercised, the group plans to divest a 12.75% stake in DORC in 2024,” Fitch Ratings said.

It is remarkable to see that in one month, the Dangote Refinery had become a Mecca of sorts to top parliamentarians and society watchdogs like the media and CSOs, all of who by the nature of their functions are supposed to be impartial and objective with the protection of the common good as their top priority but who in reality appear to have become blatantly partisan.

In their newfound love for Dangote, none of these individuals or groups fully addressed to the to find out the ultimate truth on critical issues of the production of adulterated diesel or not, or the accusations of the Dangote Refinery’s attempt to entrench a monopoly by asking government to prevent the importation of fuels in a manner that could distort the markets, or the potential swallowing up of other players along the fuel value chain.

It is disturbing that lawmakers who ought to exhibit impartiality and ensure that a level-play field is provided for all businesses appear to taken sides in a matter under investigation, as evident in their various eulogies of the Refinery and its promoter. We all need to exercise caution in taking sides in a society such as ours, with its diversity and tendency for recourse to expression of primordial sentiments, which instigate and aggravate existing ethnic and religious fault-lines.

Granted that local businesses like Dangote Refinery, which are of strategic benefit to Nigerians, should be protected from being overrun by foreign business entities, it does not excuse it from complying with provisions of extant by laws regulating its operations. The allegations against Dangote Refinery are weighty and need to be thoroughly investigated. We do not need more dramas at this time.

Bosun Adetiloye is an Abuja-based public analyst.