Connect with us

Senator Ihenyen: The $9 billion Dangote refinery: Beyond another museum relic


Senator Ihenyen: The $9 billion Dangote refinery: Beyond another museum relic

by Senator Ihenyen

Nigeria is Africa’s biggest oil producer but because we lack refining capacity, we currently import more than three-quarters of the fuel we consume. Yes, it is that simple, unless you’re in the government, where it becomes complex and knotty or a member of the oil cabal in which case it is rocket science. Those are the only ones who do not see the present state of things as absurd, shameless and irresponsible.

Although we have the government-owned refineries in Port Harcourt, Warri and Kaduna, they are only currently operating at less than 30 per cent of their installed capacity. It is not as if the government has not been making efforts to reverse the situation but previous efforts to repair our dilapidated refineries and build new ones have been repeatedly frustrated. Understandably. The business interests of powerful fuel importers have taken priority over national interests. And that is why it cannot be seen to be a simple matter by this class of players in the oil and gas sector in Nigeria – the ‘condom-like’ government in the back-pocket of a cabal who has a thing for the ‘safe sex’ with our national wealth. No, it is you who call it rape. The corruption and inefficiency continue to serve as lubricants in the paradox the country has found itself. Nigeria has lost and continues to lose billions of dollars to subsidy-related scams.

READ: BudgIT: How Dan Etete & Friends Got $1.1bn And What You Can Do… In One Infographic

We have seen how huge public funds end up as subsidies to a petroleum products importing cabal. Between 2009 and 2011, the Nigeria Extractive Industries Transparency Initiative report on the oil and gas sector stated that there was a rise in the subsidy paid through the Petroleum Products Pricing and Regulatory Agency, increasing from N208 billion in 2009 to N278 billion in 2010, and astronomically to N1.12 trillion in 2011. In 2012, an investigation revealed that in two years, more than $6bn had gone down the bottomless throat of fuel subsidy scam.

It is against this sorry state of the oil and gas sector in Nigeria that the decision of the Dangote Group of Industries to establish Nigeria’s first private and Africa’s largest petroleum refinery, with a projected daily production output of 400,000 barrels a day must be applauded. A huge investment of $9 billion was made to set up the oil refinery and petrochemical complex at the Olokola Liquefied Natural Gas (OKLNG) Free Trade Zone.

Lauded by many as a great demonstration of patriotism and pan Africanism by the President/Chief Executive of Dangote Group of Industries, Alhaji Aliko Dangote, Africa’s wealthiest man, the historic signing has raised some hope in the country. With the huge potential of turning Nigeria into a petroleum exporter, such development must be seen as a positive one.

Having been greatly successful in the cement, flour and sugar industries, the Dangote Group is expected to bring its excellent entrepreneurial experience and spirit into the oil sector. Worth an estimated $16bn (about N256bn), Alhaji Dangote strongly believes that when it becomes operational in 2016, the refinery would also create jobs opportunities in Nigeria – about 85,000 jobs.

Globally, the initial loan facility was co-ordinated by Standard Chartered, and by Guaranty Trust Bank in Nigeria. With this arrangement, a $3.3bn loan deal was signed by Alhaji Dangote with local and foreign banks for the construction of not only the refinery, but as well as fertiliser and petrochemical plants. With these, Nigeria will not only be an exporter of fuel and petroleum products, but also the unprecedented feat of having the country export fertiliser to other countries would be achieved. With $3bn in equity from Dangote Industries and another $6bn to be raised in loan capital, the total cost of the venture is $9bn.

Interestingly, with a projected daily production output of 400,000 barrels a day, this is the combined capacity of the government-owned refineries in Port Harcourt, Warri and Kaduna, If they had all been operating at full capacity. Currently, they operate at less than 30 per cent, perhaps symbolising the mess that the oil sector really is in the country. From the angle of the common man on the street, the Federal government might as well be ‘sacked’.

Nigeria greatly needs a shift. The time to significantly reduce our dangerous dependence on oil imports may have finally come. The time to shift from a seemingly abundantly resource-cursed oil-rich nation to an industrialised economy with infrastructural and human capital development fuelled by a diversified economy. This historic private-sector owned refinery structure is bound to create opportunities for the country.

It has always been my conviction that the rich natural resources of any nation should be used for the welfare of its people. The Nigerian government is expected to harness the resources of the nation and promote national prosperity and an efficient, dynamic and self-reliant economy. This must be geared towards securing the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity. These economic objectives have even been entrenched in Chapter II of the 1999 Constitution of the FRN (as amended). Of course, they remain ‘mere’ fundamental objectives and directive principles of state policy. But time and again, we have seen how the failure, neglect or refusal by administration after administration to observe and apply these provisions in state policies continues to ruin us all. The NPN of the second republic and the current ruling but breaking PDP know better.

Is it surprising to find that labour groups in the country have been applauding the move? Seen as a historic private sector investment that will help genuinely develop the much-needed local capacity in the oil sector and create jobs, the National Union of Petroleum and Natural Gas Workers, (NUPENG) declared their delight over the proposed refinery/petro-chemical and fertiliser complex, saying the venture is bound to end the current massive importation of petroleum products into country. They have equally called on other private investors including the multinational oil companies to do the same.

We all know how up to 18 firms that were granted licences to establish refineries under the Obasanjo administration, till now, have failed, refused or neglected to make use of the licence by establishing refineries in the country. Dangote refinery may just be able to make the difference. When it starts operating in 2016, it is expected to become a major foreign exchange earner in the export of refined petroleum products in the country. For the over 170 million Nigerian people, who have continued to suffer for what they have in abundance, there is a beam of hope. Nigerians must be seen to be better off from the rich natural resources of the nation. We cannot continue to watch a few players, with foreign capitalist interest at the expense of national interests, continue ‘business as usual’. To be sure, it is not the violent agitations in the Niger Delta that is being advocated here, but the need for genuine economic participation in the oil and gas sector. Dangote Refinery has set the pace.

We need to develop efficient local capacity in such a leading sector of our national economy. To this end, the government must make the right policies to attract the right investors. The Petroleum Industry Bill (PIB) should also be passed into law to provide the enabling regulatory and legal framework towards ensuring competitiveness, transparency and the best international practices in the petroleum industry.

It is my hope that the Federal government will provide the enabling environment that will ensure the competitiveness of such private refineries in the country. Effective regulation of the oil and gas sector and provision of improved road infrastructure for efficient haulage and distribution across the country will enhance performance and delivery. And of course, the government must ensure that there is improved power supply in the country to enable the efficient operations of these refineries. We cannot afford to create more museum relics from plants working at 30 per cent capacity.

Click to comment

Latest Posts



To Top