Home OPINION COMMENTARY Dangote Refinery, IOCs, And Nigerian Leaders

Dangote Refinery, IOCs, And Nigerian Leaders

Aliko Dangote

Devoid of sentiments and ignorance, this is the truth about Dangote and his Refinery:
1. To start with, Dangote is a spoilt monopolistic child who is throwing preemptive ejaculative tantrums. He can’t survive without government’s support and the privilege of monopolies Despite the fact that he is paying about $1.5/MMBTU which is one of the cheapest rates (GBI) in the country, he is owing the IOCs millions of dollars in gas payment arrears, the payment though indexed to dollars is in Naira. We need to understand this Dangote’s antecedent.
2. On the accusation levelled against NNPCL, there is no doubt that this entity is a cess-pool of corruption, but on this particular issue, Dangote is just a narcissist who is gaslighting the agency. Let me state the facts here. It should interest you to note that Nigeria’s daily average crude oil production is about 1.25 million barrels of crude oil per day, given that Nigeria has a 60/40% JV arrangement with the IOCs save for the now departed Shell with 55/45% equity distribution. Accounting for the PSC, Nigeria should be getting around 750,000 barrels of oil per day. Kindly note that Dangote’s refinery needs about 650,000 per day. However, because NNPCL and the Nigerian government have not been funding their share of the cost of producing oil, this volume is always lesser than the quoted amount above. Buhari executed 7 forward sale agreement, that is, borrowed money and used our crude oil for several years as repayment, a good example is the Afrexim bank loan of $3.3b dollars that Tinubu took last August, the crude oil commitment at about 11.58% interest is 90,000 barrels of crude oil per day. Given all these crude oil deductions, Nigeria gets about 200,000 barrels of crude oil per day. This is what Tinubu sells for about $16 million dollars at $80/barrels as the main source of dollars for 213 million Nigerians, out of this money, there is a backdoor subsidy of about $8m per day. Now let me ask this simple question: Where does Dangote expect NNPCL to get the 650,000 barrels to give him for his refinery? If Tinubu gives him the 200,000 barrels, where do we get money to import drugs, buy cars, import diesel, run government? Despite the fact that NNPCL owns 20% of Dangote’s refinery equity, NNPCL decided to sell some of their crude oil to him, Dangote however refused to provide a Letter of Credit (LOC) for the payment since 27th June 2024, he has been incurring a $65,000 daily demurrage. They issued him a load and anchor permit and not a load and sail clearance. Now, where is NNPCL fault on this issue? This same Dangote imported WTI crude from USA, he incurred 4 weeks of demurrage because he couldn’t pay for the crude oil. These are all logical and not emotional arguments.
3. Regarding accusations against the IOCs, they are bending over backward to accommodate his request, but as usual, he is a spoilt Oliver twist. IOCs have SPA ( Special Purchase Agreement) commitment spanning 10 to 20 years with international buyers, there is penalty for default of these contracts, despite these constraints, one of the IOCs had to incorporate another trading company in London at the cost of millions of dollars to sell crude oil to Dangote. Dangote’s ship arrived at one of the IOCs export terminals, loaded crude oil, but once again, could not provide an LOC (letter of credit) since 29th June 2024, demurrage is ongoing as we speak. Dangote is asking for an additional $6 per barrel discount and wants to pay in Naira. No one will sell crude oil to Dangote in Naira because oil blocks are awarded in Dollars, signature bonus are paid in dollars, seismic survey and aeromagnetic survey with gravity data are acquired in dollars, interpretation of the data is 80% dollars, wells are drilled in dollars, production facilities are constructed in dollars. Even Tompolo surveillance contracts are largely dollar denominated. Someone should please make me understand why they would sell to him in Naira? The PIA act permits payment in Naira or dollars, but given my explanation here, who would sell in Naira ?
4. Regarding the so-called importation of dirty diesel, did we start importing diesel in Nigeria in April when dangote started producing diesel ? We should be able to apply some logic here. Have we not been importing diesel since ? Why is Dangote shouting now? He simply wants monopoly. Why are all our generators not dead all these while since we have been importing diesel? This is common sense now !!! And, I am disappointed that none of the lawmakers asked this simple logical question. What does Dangote want to happen to the import license that has been importing diesel for us for more than 40 years? Should they all cease to exist from April 2024? These are questions that the lawmakers are not asking.
5. On a final note, the PIA was 20 years late, investments have moved elsewhere, people played politics with it, and that’s why the IOCs are leaving. Shell, ExxonMobil, and Agip have all left. It’s only Chevron and Total remaining. If they make too much trouble for them because of Dangote, they will leave as well. Your corrupt politicians would buy them and turn them to another Ajaokuta.
6. Dangote is looking for another monopoly. People should be able to read between the lines.

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