The Dangote refinery question, pardon my ignorance! – Dr. Muiz Banire
In the last one week, the media, both online and otherwise, have been agog or abashed with issues around the Dangote refinery in Lagos. Prior to that, there had been what I called multiple or instalmental commissioning of the refinery by the Government, notwithstanding the partial completion of same. I notice that since the issue started raging, a lot of Nigerians have been cautious to comment either for reasons of fear of government or the threat of courting the enmity of Aliko Dangote. I recall asking a high ranking member of the ruling party, All Progressives Congress to comment as per his take on the raving debate on an online platform, and whose response was simply , ‘Muiz, don’t put me in trouble’. This typifies the kind of responses I have been getting from high-ranking government officials.
The strange inference seems to be that it is a conflict between the President and Commander-in-Chief, Bola Ahmed Tinubu, GCFR, and the proprietor of Dangote Refinery, Aliko Dangote. How majority of these people came to the conclusion beats my imagination. However, it is safe to infer that it may be due to what is now trite in Nigerian governance circle, ‘body language’ of the President in this respect. The belief is that the regulators of the petroleum industry dare not be acting in the manner they are doing without the consent of Mr. President, tacit or otherwise.
Not until some few days ago, at the verge of the venture sinking, that some positive comments on the side of the refinery started rolling out, most of which cannot be said to be genuine. As the President used to say while he was Governor of Lagos State, Esin Oba to sonu ni, eni to fe ko ri, aba won wa; eni ti o fe ki won ri, a ba won wa; eni t’o ba won wa, to ba ri, ti o maa le si igbo, o n ba won wa. The above literally means it is the case of the proverbial lost horse of the King. Those who want the horse to return, will join the search. Those who do not want the horse to return, will join the search. Even those who will find it and further chase it into the bush, will join the search. There are some sympathizers out there that have made releases in the public while behind promoting the attacks on the refinery. Anyway, I hope that Aliko Dangote knows better. With the commissioning, Nigerians expected production to commence but regrettably, this was not forthcoming as the refinery continued to postpone production.
Anyway, after a while and in a staggered manner, the production of Diesel, otherwise known as Automotive Gas Oil (AGO) commenced to the admiration of Nigerians, particularly in terms of costs. The sales cost was cheaper than the imported product and Nigerians were excited that at last, there seems to be some reprieve on the way in point of the prohibitive costs of petroleum products in the country. Then remains the production of fuel (premium spirit) which production again was postponed twice due to the delay in the supply of crude oil by Nigeria Upstream Petroleum Regulatory Commission.
Ultimately, some barrels filtered in to the refinery, although negligible compared to the expected quantity, but refining still progressed with Nigerians heaping a sigh of relief as to the perennial queues for fuel and the prohibitive cost to the people. The supply issue became greeted again with controversy as to the reluctance or difficulty of the government through its agency to allocate sufficient crude oil to the refinery as contemplated, if not as agreed, with the refinery. It was at this point that the proprietor of the refinery, Aliko Dangote cried out as to the nefarious activity of the international oil companies in frustrating the refinery production efforts by depriving it of crude oil. In fact, the refinery had to start sourcing for crude oil from outside the country as a cost not factored into the production cash flow. This was becoming detrimental to the operations of the facility. This became unpleasant to Nigerians and hues and cries started. However, it was being suggested in some quarters that there is nothing the government could do in this regard as there had been forward commitment by way of sales of the crude oil to the international companies.
It was also argued that if truly the refinery is a multinational as floated, it should be able to compete by sourcing its crude oil anywhere and not rely on being spoon-fed by the government. To my mind, this is neither here nor there. This, I shall deal with later. Hardly had that dust settled, when the issue of importation of fuel arose, decimating the viability of the refinery and threatening the survival of the whole investment. According to the proprietor of Dangote Refinery, the government took pleasure in importation of refined products as against encouraging and promoting local production, thereby jeopardizing the success of the refinery. The government, in reaction to the allegation, through the head of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Engn.
Farouk Ahmed, said that the government was not satisfied with the quality of the products from the Refinery which it claimed was substandard and liable to injure the health of our vehicles due to the high level of sulphur contained in it. In a very categorical manner, Farouk Ahmed stated that the product was substandard relative to the international standard. This agitated the proprietor of the refinery, Aliko Dangote, who responded by asserting that if anything, the situation is the reverse as it claimed it is the Authority that is condoning the importation of substandard products into the country through forged and fake documents. In addition, he insinuated that the further motive behind the attempt to strangulate the operation of the refinery, by starving it of crude oil and patronage, is due to the establishment of a rival refinery in Malta by some officials of the regulatory organs.
The House of Representatives, in response to the various allegations, swiftly set up a committee to investigate the allegation made by Farouk Ahmed and countered by Dangote Refinery, and also visited the refinery by way of oversight. Samples of fuel purchased from external petrol stations and that of the refinery were there and then subjected to laboratory evaluation indicative of the quality of the product of the refinery. While the investigation is still on, the House of Representatives has recommended the suspension of the Headship of the regulatory agency, Farouk Ahmed. The interesting thing, in all of this drama, as remarked above, is that there are so many friends and foes on the issue. A lot of sympathy has been expressed by so many Nigerians, genuinely and otherwise. There is the major contention that what Dangote Refinery is indirectly seeking is the monopoly of the Refinery business, as allegedly done by him in other areas.
This is not unexpected as there are several other Nigerians who are importers of petroleum products and who believe that their survival is threatened. I believe this set and others of their ilk are the supporters of the regulators in this respect. This discourse is not meant to address the grounds of such opposition to the Refinery and as such, it will suffice to state that the grouse of the class is with state capture by the proprietor of the Dangote Refinery under previous administrations.
Beyond the accusations and counter-accusations is also the seeming confusion around the subject, as regard the status of NNPCL. I have read so many interventions on the matter to the extent of getting confused. Although, as the title of this discourse reflects, I have no competence in this area but believe I can deal with the other issues of general knowledge. Of interest most to me is the role of the NNPCL in all these. I have listened to so many commentators and read so many interventions against the NNPCL. In one breath, it is being suggested in some of the interventions that NNPCL is denying the refinery crude oil and in other respects, it is said that NNPCL is attempting to frustrate the refinery through importation of products. As at my last recollection, NNPCL is a limited liability company that is like a competitor to the Dangote refinery and which explains why it is an investor in the refinery also. As this is, NNPCL is supposed to then be a stakeholder in the refinery and ought to be crying out like the Dangote group.
Aside the percentage holding in Dangote Refinery that is said to have declined for whatever reason advanced, the amount still at stake, should the refinery be liquidated, is still substantial to be of concern to any sincere investor. It is therefore baffling that the NNPCL is not only keeping mute but tend to be a collaborator or conspirator in all of these affairs. Little wonder therefore that it is being pulled along with the regulators. I think a major lacuna in the arrangement after privatization of NNPCL is the continuous retention of Mele Kyari as the Chief Executive. The silence undoubtedly is worrisome. Is it that there is no representation of the NNPCL on the Board of Dangote refineries? Is NNPCL not interested in the management and operation of the company despite the investment? Why is it that it is playing dumb in the face of the various allegations from both sides? I note the reaction of Mele Kyari himself in reaction to the operation of rival refineries in Malta by officials of the government. Let me state that even if the NNPCL is operating such refineries in Malta, it will be in the ordinary course of business of the company, particularly if on all fronts, it enjoys comparative advantage over Dangote Refineries.
Kyari appears to be oblivious of this fact. Now addressing the regulator, the Farouk Ahmed-led Nigeria Midstream and Downstream Petroleum Regulatory Authority, its role basically is to regulate technical, operational and commercial activities in the sector and maintain standard in the industry in terms of petroleum products and Gas plants while the other regulator, the Nigerian Upstream Petroleum Regulatory Commission deals with regulating technical, operational and commercial activities in the upstream sector of the petroleum industry. These are the principal actors in the raging confusion. As for Farouk Ahmed, who asserted the substandard nature of the product of Dangote refinery, I have no issue with his utterance if he can establish and justify the allegation. However, if he is unable to prove the assertion, undoubtedly, he would have injured the brand and reputation of Dangote refinery. Consequently, rather than all circuits that is playing out on the issue, I would have expected Dangote refinery to have legally challenged the statement, once it is equally sure of the standard and quality of its products.
There are so many laws under which the company/refinery can drag the regulator for this unwarranted assault on its brand. It is not my place to start detailing same out but enough to state that the utterance, if unjustified , is defamatory of the organization and action can be instituted not only to remedy the situation but to secure punitive damages against the Authority. In fact, I believe that the statement made is outside the course of duty of the Chief Executive’s mandate, and thus can equally be dragged along in the suit. This is the best way to deal with the situation, in addition to whatever petition that can be sent to his appointor, and by extension, the National Assembly as the presumed protector of the people’s right. With regard to deprivation of access to crude oil, this largely depends on the contractual relationship between the Authority in charge and Dangote Refinery. It is not, and must not be a question of sentiment. The basic question is, is there a contractual relationship to supply crude to the refinery?
If yes, and there is denial to supply, this is simply a case of breach of contract actionable in our law courts. Let the Refinery approach the court for enforcement by way of specific performance and damages. However, if there is no such contractual relationship, the Refinery should stop whipping up sentiment as this is simply a case of business transaction. No business runs or survives on sentiments. In that wise, the refinery will have to source for the supply anywhere including from the country. Period. In all of the imbroglio therefore, there is so much confusion reigning due to undue sentiments, on a matter of basic commercial transaction, rather than objectivity.
