By Banji Ogungbemi
Below is the perspective of a senior friend of mine on Dangote Refinery story. “That Refinery is a scam.It is a government premature monster baby. It can not survive without the feeding bottle provided by the government.
There was no proper feasibility study. Something was put together by his assorted Indian experts. They told us in London that the Refinery was built on the assumption that subsidy would continue into perpetuity.
A man with a degree in Arabic & Islamic Studies from a Cairo University killed all competitors in Cement and hit money. He went into indomie, with limited success. His past experience in oil & gas is near zero. He thought it would be like cement and Indomie. He killed all the Govt 4 Refineries and went into the high-end tech of the industry. Refining. And he went into it at an unprecedented scale. The biggest and most modern in the world. Halfway through, he went broke. He scammed the Fed Govt to be a partner in the fraud. A government that could not maintain any of its own 4 Refineries borrowed $6b to invest in the monster in Lekki.
Weren’t we told that Dangote had received crude oil into its tank as far back as January? So what’s this noise and blackmail all about?
Simple.
Dangote produced diesel and allegedly brought the price from ₦1,800 to ₦1,200. Bravo. Nigerians expect him to do the same with Petrol. So they were touting a pump price of ₦300per litre for petrol.
All over the world Diesel is slightly cheaper than petrol. Nigeria is the only exception I know. This is due to the huge subsidy on Petrol.
The reality facing Dangote now is that if he buys crude at $ 82 per barrel, his petrol would come out at ₦1,400 per litre.
He thought the Fed Govt would give him crude oil at a preferential price of say $40 or $20 or even $0 per barrel.
Where would the Fed Govt get the crude?
80% of the crude produced is stolen. It is the remaining 20% that is shared by NNPC and the IOCs.
The production sharing agreement between the NNPCL and the International Oil Companies is 60%/40%. Each has the free hand to sell to whoever wherever. The IOCs have standing sales agreement with their customers around the world.
The Fed govt have theirs. They have sold crude yet to be produced in the next four years. The money was partly used to finance Dangote Refinery, Existing debts, Election, and the unbudgeted last-minute infrastructure in Katsina-Daura- Niger axis. So the Fed government has no crude to sell to Dangote even at $ 82 per barrel.
Dangote then went to the IOCs. What shocked me was the arrogant approach. He wanted to buy from them on his own terms, thinking he was dealing with government officials.
*The lesson in all this*
- No matter how smart you are, do not go into a business you know nothing about.
- Nigerians should stop counting their chickens before they are hatched. Petrol will not stay at ₦600 per litre. It will go to about ₦1,400.
- Let the protesters be prepared. But let them make Abuja the theatre. Otherwise, each protester should go back to their state of origin. They should not hide behind any spurious claims to destroy Lagos and the SW after making their own homes inhabitable.
This Dangote Refinery will take a chapter in my memoire. I’d written so much about it in several social media forums. As far back as 2 years, some people thought I was too pessimistic. They jeered at me when Buhari commissioned the uncompleted gigantic folly in May 2023. He who laughs last …”
Banji Ogungbemi
