turnpot@gmail.com 0807 552 5533
The richest man in Africa, Alhaji Aliko Dangote, stirred the hornet’s nest recently when he accused the International Oil Companies (IOC) operating in Nigeria of sabotaging his efforts to put an end to the embarrassing, ridiculous and neck-breaking importation of refined fuel products by Nigeria. Although Dangote exonerated the NNPC from the alleged conspiracy, it should be obvious to the discerning that he might only be bending over backward to play politically correct.
Dangote refinery has also elaborated Dangote’s allegations. NNPC and the IOcs have not responded frontally but proxies have seemingly done exactly that. Nigerians, smarting and suffering from the high price they pay for refined petroleum products, have been gutted by Dangote’s allegations. Hopes placed on the government’s promises that its refineries would work by now having been dashed severally, it becomes too much to stomach that the privately-owned Dangote refinery, which has started to work, again after several postponements, is being sabotaged. Therefore, the outpouring of anger by citizens can be understood.
Having not appointed a substantive Minister for Petroleum Resources, President Bola Ahmed Tinubu, like his predecessor Muhammadu Buhari, is the country’s substantive Minister of Petroleum Resources. Therefore, the buck doubly stops on his desk; first, as the Minister of Petroleum Resources and, next, as the President and Commander-in-Chief. While others may pass the buck, Tinubu cannot. While others may hide, Tinubu, like the goldfish, has nowhere to hide. And while others may give excuses and Nigerians can still give them the benefit of doubt, Tinubu cannot be allowed such luxury.
Interestingly, I have not been able to lay my hand on anything the president has said on the raging controversy between Dangote and the IOCs. He has to speak. He must speak. He has explanations to give on why the promised date for the government-owned refineries to start operation keeps somersaulting. He has also to tell Nigerians when the suffering and suffocation over fuel, which keeps witnessing scarcity, followed by increase in price, will abate or grind completely to a halt. Nigerians deserve to know.
Let us first take a look at the recriminations between the warring groups; we shall return to draw pertinent conclusions. A news medium reported the Dangote angle thus:
“The management of the 650,000 barrels per day (bpd) Dangote Refinery (has) accused the International Oil Companies (IOCs) operating in Nigeria of planning to ensure the failure of the $19 billion refinery. The Vice President, Oil and Gas at Dangote Industries Limited (DIL), Devakumar Edwin, said the multinationals were deliberately frustrating the refinery’s efforts to buy local crude by jerking up premium prices above the market price…
Edwin said the situation was forcing the refinery to import crude from countries as far as the US, with the attendant high costs. He also lamented that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) was still granting import licences indiscriminately to marketers to import dirty refined products into the country.
Edwin disclosed that the federal government issued 25 licences to investors to build refineries but Dangote Refinery was the only one that delivered on its promise. He said the Dangote group deserved every support from the Nigerian government, especially with the Domestic Crude Supply Obligation (DCSO), as specified in the enabling law… He observed that while the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) was trying its best to allocate crude oil to the refinery, the foreign oil companies were bent on frustrating the move.
‘It seems that the IOCs’ objective is to ensure that our petroleum refinery fails. It is either they are deliberately asking for ridiculous and humongous premium or they simply state that crude is not available. At some point, we paid $6 over and above the market price. This has forced us to reduce our output as well as import crude from countries as far as the US, increasing our cost of production.
‘It appears that the objective of the IOCs is to ensure that Nigeria remains a country which exports crude oil and imports refined petroleum products…’
Describing the situation as exploitation, he emphasized that, unfortunately, the country was also playing into the hands of the multinationals by continuing to issue import licences at the expense of the economy and at a cost to the health of Nigerians, who were exposed to carcinogenic products…
‘In spite of the fact that we are producing and bringing diesel into the market, complying with the Economic Community of West African States (ECOWAS) regulations and standards, licences are being issued in large quantities to traders who are buying the extremely high sulphur diesel from Russia and dumping it in the Nigerian market…’ “
These are weighty allegations made in the open, live and direct, frontally and not under-the-table and by a top official of Dangote and not by proxy. Does this suggest that they are sure of their onions, and also that they are going for broke? Let us consider one response to Dangote, which a news medium also reported thus:
“To start with, Dangote is a monopolist (who finds things difficult) 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 dollar, is in Naira…
“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 agreements, that is, he 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, where does Dangote expect NNPCL to get the 650,000 barrels to give him for his refinery?
“Regarding the accusations against the IOCs, they are bending over backward to accommodate Dangote’s requests… 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… The PIA Act permits payment in Naira or dollars but given my explanations here, who will sell in Naira?
“Regarding the so-called importation of dirty diesel, did we start importing diesel in Nigeria in April when Dangote started producing diesel? …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 we have been importing diesel? …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?
“On a final note, the PIA came 20 years late; investments have moved elsewhere… Shell, ExxonMobil, and Agip have left. It’s only Chevron and Total remaining. If we cause too much trouble for them because of Dangote, they will leave as well. Dangote is looking for another monopoly. People should be able to read between the lines”.
Vintage crossfire! Are the figures peddled here factual and correct? What we can deduce from the exchange of fire above is that the Buhari administration ruined the Nigerian economy not only during its tenure and for his successor but also for generations of Nigerians yet unborn! Why, then, is the Tinubu administration reluctant to make full disclosure to Nigerians? Why is it contented with carrying the can for Buhari and his ruinous henchmen and suffering in silence? Why is the same Buhari and his cabals still roaming the street free?
Where there is no consequence for bad behaviour, impunity reigns! And seeing that the economy is in such a bad state, why is the Tinubu administration still displaying obscene ostentation and callous insensitivity in the salaries, allowances and perquisites they award themselves as well as in their misplaced priorities? I say why?
* Former Editor of PUNCH newspapers, Chairman of its Editorial Board and Deputy Editor-in-chief, BOLAWOLE was also the Managing Director/ Editor-in-chief of THE WESTERNER newsmagazine. He writes the ON THE LORD’S DAY column in the Sunday Tribune and TREASURES column in New Telegraph newspaper on Wednesdays. He is also a public affairs analyst on radio and television.
Share your story or advertise with us: Whatsapp: +2347068606071 Email: info@newspotng.com
