Chairman of Dangote Group Aliko Dangote is not one to talk very often to the media about his businesses.
However, his $20 billion refinery at Lekki Free Zone in Lagos has made him quite vocal in the past few days. From faulting the Central Bank’s 26% interest rate at the opening session of a three-day summit earlier this month organised by the Manufacturers Association of Nigeria (MAN) to announcing he was pulling the plug on his plan to invest in the steel industry, Africa’s richest man may be having the most challenging time of his life.
The issues with the refinery have come in the form of allegations and counter-allegations.
Firstly, the management of Dangote Industries Limited accused international oil companies (IOCs) of frustrating its refinery operations.
The company said IOCs insisted on selling crude oil to its refinery through their foreign agents. It argued that the local price of crude would continue to increase because the trading arms offer cargoes at $2 to $4 per barrel, above official price of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
But the NUPRC disagreed, stating that IOCs are not refusing to sell crude oil to the Dangote Refinery.
The commission’s CEO Gbenga Komolafe, during an interview with Arise TV on July 15, said that while the Petroleum Industry Act (PIA) makes it obligatory for IOCs and other producers to sell to local refineries like Dangote, the pricing of the crude is based on a “willing-buyer/willing-seller basis.”
This, Dangote Refinery say, has forced it to depend on crude oil supplies from Brazil and the US.
On July 14, Dangote told journalists during a briefing at the plant that the Nigerian National Petroleum Company (NNPC) Limited had whittled down its shareholding in the refinery to 7.2% from 20% after failing to pay the balance of funding owed.
NNPC agreed three years ago to buy shares for $2.7 billion in the 650,000 barrels per day refinery.
Dangote said the NNPC failed to meet its part of the deal.
“NNPC no longer owns a 20% stake in the Dangote refinery. They were (meant) to pay their balance in June, but have yet to fulfil the obligations. Now, they only own a 7.2% stake in the refinery,” he said.
The NNPC’s decision to reduce its stake raised concerns among observers.
Defending itself, the NNPC through its spokesman Femi Soneye released a statement on the same day, saying the decision to reduce its investment was carefully considered and communicated several months ago to Dangote.
“NNPC Limited periodically assesses its investment portfolio to ensure alignment with the company’s strategic goals.
“The decision to cap its equity participation at the paid-up sum was made and communicated to Dangote Refinery several months ago,” the statement said.
Fuelled by growing frustration over its impasse with IOCs, the leadership of Dangote Refinery alleged there is imported “dirty fuel” in the country.
Reacting to the allegations that the Nigerian Midstream and Downstream Petroleum Authority (NMDPRA) was giving licences to some traders to import “dirty fuel” into Nigeria, the authority’s chief executive Farouk Ahmed argued on July 18 that it was the Dangote fuel that had the larger content of sulphur.
He said the refinery, which has been selling diesel and aviation fuel in Nigeria for months, has not been licensed, stating that it is still at the pre-commissioning stage.
“The claim by some media houses that there were steps to scuttle the Dangote Refinery is not so. The Dangote Refinery is still in the pre-commissioning stage. It has not been licensed yet; we haven’t licensed them yet. They are still in the pre-commissioning. I think they have about 45 per cent completion,” he said.
The NMDPRA boss warned that Nigeria cannot rely heavily on the Dangote Refinery for its fuel supply.
According to him, the refinery had requested the regulator to stop giving import licences to other marketers so as to be the only fuel supplier in Nigeria.
“We cannot rely heavily on one refinery to feed the nation, because Dangote is requesting that we should suspend or stop importation of all petroleum products, especially AGO and direct all marketers to the refinery, that is not good for the nation in terms of energy security. And that is not good for the market, because of monopoly,” he said.
But Dangote dismissed Ahmed’s allegations when lawmakers visited the refinery on Saturday, July 20.
During the lawmakers’ visit, the delegation led by Speaker of the House of Representatives Tajudeen Abbas and his deputy Benjamin Kalu, observed a credibility analysis at the refinery’s laboratory to assess the quality of the diesel product.
The test revealed that the diesel sample, commonly known as AGO, measured 87.6 parts per million (PPM). Under ECOWAS regulations, the proposed limit for all imported diesel is 50 PPM, while for locally produced diesel from refineries within the ECOWAS region, the limit is set at 200 PPM until December 2024. From January 2025, stricter standards will be enforced.
“I want to plead with the regulator to come at any time, whether Sunday or Monday, or take the sample and I guarantee you before he gets here, our PPM will be even below 10,” Dangote said.
He added that the NMDPRA accredited and approved the Dangote Refinery Laboratory in March 2024.
Abbas expressed surprise at the contradictory statements from the NMDPRA, which had certified the refinery’s operations as meeting requirements, and reports suggesting the NNPC was unhappy with the product’s quality.
In response, Dangote said imported products endorsed by regulatory agencies had failed quality tests at the Dangote Refinery Laboratory. He accused some laboratories of being influenced to produce specific results, suggesting an independent approach where samples are purchased from various filling stations for unbiased testing.
“We have successfully exported diesel and jet fuel to Europe and Asia without any complaints; in fact, we have received repeated orders, indicating satisfaction with our products,” he said.
Dangote proposed that a team, including the CEO of NMDPRA and a representative from the Dangote Refinery, should conduct tests on samples from different filling stations to ensure accuracy and transparency.
Apparently displeased by the term monopoly used by Ahmed, Dangote told journalists at his refinery on Saturday following the lawmakers’ visit that his company decided to avoid the steel industry “to prevent accusations of being branded a monopoly”.
Two months ago, the firm announced plans to invest in the steel industry and expand the economy.
“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. So we don’t want to go into that.
“If you look at all our operations at Dangote (Group), we add value; we take local raw materials and turn them into products, and we sell.
“We have never consciously or unconsciously stopped anybody from doing the same business that we are doing.
“When we first came into cement production, it was only Lafarge that was operating here in Nigeria… Nobody ever called Lafarge a monopoly,” Dangote stressed.
In an interview with Premium Times, he offered to give up ownership of the refinery to NNPC.
“…I am ready to let go, let the NNPC buy me out, run the refinery,” he said in the interview on Sunday, July 21.
“They have labelled me a monopolist. That’s an incorrect and unfair allegation, but it’s OK. If they buy me out, at least, their so-called monopolist would be out of the way.”
