What’s Causing Trouble Between Dangote and the Nigerian Government?

Recent events indicate that not all is well between Africa’s richest man, Aliko Dangote, and some agencies of the Nigerian government.

Many Nigerians had high hopes that when Dangote’s refinery started operating fully, it would significantly reduce the price of petroleum products in the country. However, this has not yet happened.

Nigeria, despite being one of the largest crude oil producers in Africa, still depends on importing all petroleum products like Premium Motor Spirit (PMS), known as fuel, kerosene, diesel, and aviation fuel for airplanes.

The Nigerian government owns four refineries – two in Port Harcourt, and one each in Kaduna and Warri – but they are not operational. Therefore, people believed that Dangote’s refinery would solve the problem.

Initially, the plan was for the Nigerian government, through the Nigerian National Petroleum Corporation (NNPC), to hold a 20% stake in the refinery. However, Dangote announced at a press conference on July 14 that “NNPC no longer holds a 20% stake in Dangote Refinery… they only hold 7.2%”.

He explained that NNPC did not pay the balance of their share by June this year, and even after a one-month grace period, they still did not pay.

Shortly after the July 14 press conference, cracks began to show in the relationship between Dangote Refinery and NNPC.

Allegations and Counter-Allegations

Dangote Refinery claimed that International Oil Companies (IOCs) in Nigeria were either refusing to sell crude oil to them or selling it at prices higher than the official price set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

The NUPRC oversees activities in the upstream petroleum sector.

But the head of NUPRC, Gbenga Komolafe, said in an interview with Arise TV that it was “erroneous” to say that IOCs were sabotaging Dangote Refinery.

He explained that the process of making crude available to refiners is on a “willing buyer, willing seller basis”.

Additionally, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) alleged that the quality of diesel produced by Dangote Refinery was low and inferior to the ones being imported.

According to the head of NMDPRA, Ahmed Farouk, the sulfur content of Dangote’s diesel allegedly exceeded the recommended level for West Africa, which is 50 ppm (parts per million).

“Dangote refinery produces between 650 to 1,200 ppm. So, in terms of quality, their product is much more inferior to the imported quality,” Farouk claimed in an interview.

Farouk also alleged that “Dangote requested that we suspend or stop all importation, especially of AGO and Jet Kero, and direct all marketers to his refinery. But that is not good for the nation in terms of energy security, and it is not good for the market because of monopoly”.

But Dangote denied the allegation on Sunday, July 21, saying his diesel is the cleanest in the Nigerian market.

“We produce the best diesel in Nigeria. It is sad that instead of safeguarding the market, the regulator is undermining it. Our doors are open for the regulator to conduct tests on our products anytime; transparency is paramount to us,” Dangote said after some members of the Nigerian House of Representatives, including the Speaker, Tajudeen Abbas, and his deputy, Benjamin Kalu, visited the refinery.

The latest development is an interview published by the Nigerian online newspaper Premium Times on Monday, where Dangote said he would not mind selling his refinery to the Nigerian government if they want to buy it.

“Let them buy me out and run the refinery the best way they can. They have already called me a monopolist. That is an incorrect and unfair allegation, but no problem. If they buy me out, at least, their so-called monopolist will be out of the way,” the local media quoted Dangote as saying.

The BBC Pidgin has reached out to the Dangote Group for comment about the Premium Times interview.

Dangote’s Investment in Steel Stopped?

Recently, Aliko Dangote said his company had stopped their previous plan to go into steel production.

With this action, Dangote called on other Nigerians to invest in the sector, so it doesn’t appear as if only his company is undertaking all these responsibilities in Nigeria.

“Our board has decided that we will not go into steel (again) because if we do the steel business, they will call us all sorts of names like monopoly, and then also, they will encourage imports. So, we do not want to go into that.”

“Let other Nigerians go and do it. We are not the only Nigerians here. Some Nigerians have more money than us,” he said.

A few months before the Dangote Refinery started operating, Islamic clerics in Kano State, where Dangote is from, organized prayers for the success of the refinery. It seems he will need those prayers more now.

House of Reps Has Started Investigation

Following the back and forth between Dangote Refinery and NMDPRA, the Nigerian House of Representatives has started an investigation to get to the root of the matter.

Ikenga Ugochinyere, Chairman of the House Committee on Petroleum Resources (Downstream), told BBC Pidgin on Monday that the investigation is underway with a visit to the Dangote refinery facility on Sunday.

“We are deliberating on the matter, and in the coming days, we will make our findings public. I am the chairman of the committee investigating the matter. I do not have any personal view on the issue; my role is to listen to everyone, analyze the information we have, and announce our findings,” Ikenga said.

He did not specify when they would conclude the investigation.

What to Know About Dangote and His Refinery

Aliko Dangote was born in Kano in April 1967, to the wealthy Dangote and Dantata family.

He made his money from sugar and cement production before entering the oil business with this refinery, which he describes as his most challenging venture ever.

“If I knew what I know now, I would not have ventured into building this refinery,” Dangote said in an interview with CNN.

According to Forbes Magazine, Dangote’s net worth is about $13 billion, making him the richest man in Africa.

The Dangote Oil Refinery, located in the Lekki Free Trade Zone in Lagos State, was inaugurated on May 22, 2023.

The facility sits on over 2,500 hectares of land and can process about 650,000 barrels of crude oil per day when fully operational.

This makes the refinery the largest single-train refinery in the world.

When it begins full operations, it can provide 135,000 permanent jobs for the region.