Dangote Group’s Petroleum Industry Bill proposal
In the presentation, the Dangote Group had made a demand that oil import licence is given to only companies with active refinery licences. Chief Strategy Officer of the Group, Aliyu Suleiman, was quoted to have highlighted several recommendations by the company to the committee, among which was this ground-shaking demand.
“Nigeria is exceptional in being a major oil producer with near-zero capacity. Though the Dangote Refinery will help address this, there could be periods when petroleum products may need to be imported, such as when the refinery is undergoing turnaround maintenance or if demand grows to exceed capacity. To support this, licence to import any product shortfalls should be assigned only to companies with active refining licences. Import volume to be allocated between participants based on their respective products in the preceding quarter. Such import will be done under the DSDP scheme,” Suleiman said.
The Dangote Group has had an octopodal hold on the Nigerian entrepreneurial and indeed, business sector. From sugar, cement, food items production and to its recent foray into oil production, the Group controls the major artery of entrepreneurship and business as a whole in Nigeria. With this as background, it would be senseless to ignore whatever contributions the Group makes to the theoretical underpinning of any venture in Nigeria. Added to this is the group’s hold on the governmental class and its ability to blithely swing issues to its sides.
Today, Dangote’s in-road into the oil sector, with its Dangote refinery, is a phenomenal project that the Nigerian government and the people look forward to with baited breath. A 650,000 barrels per day (bpd) integrated refinery and petrochemical project, it is currently under construction at its location in the Lekki Free Zone near Lagos. By projection, the refinery, upon completion, is primed to be Africa’s biggest oil refinery and indeed, the biggest single-train facility in the world. Its initial completion schedule was 2020 until time put spanners in its works and projected completion time currently indecipherable. There is yet to be an official communication of reasons behind the inability to meet this scheduled date and communication of the sure date that the project would begin to refine petroleum products. The Oil Refinery, the brainchild of the famous richest man in Africa, Aliko Dangote, is an estimated investment that is worth $12bn and the generation of a projected job of 9,500 direct and 25,000 indirect employments. Part of the oil productions that the Dangote refinery will bring to the table is the production of a variety of light and medium grades of crude. This will subsequently lead to the production of Euro-V quality clean fuels which also included gasoline, diesel, jet fuel and polypropylene.
In the roulette of epileptic fuel supply, the considered inappropriate importation of fuel products shipped abroad as crude, the Dangote Oil Refinery offers a binge of excitements to the Nigerian government and Nigerians in general. Upon completion, it was primed to hold the hope of rescuing Nigeria from the travails of refining petroleum products abroad and shipping the same back to the country. The Nigerian government had looked forward too to the completion of the Dangote Oil Refinery as a way of ending this roulette of importation of petroleum products and shoring up its foreign exchange earnings. In December 2019, after a 4-hour tour of the refinery, the CBN Governor, Godwin Emefiele, said that the Federal Government would soon start sourcing foreign exchange (forex) from the Dangote Group, after the completion of its refinery, petrochemicals and fertilizer projects are completed. He undertook the tour in the company of the President/CE of the Dangote Group, Aliko Dangote; Deputy Governor of the CBN, Aishah Ahmad; Group Managing Director, Dangote Industries Limited, Mr. Olakunle Alake; Group Executive Director of Dangote Industries, Mr. Devakumar Edwin; and the Managing Director of Guaranty Trust Bank, Mr. Segun Agbaje. To get to this level, however, the Dangote Refinery project extracted preferential and energy-sapping considerations from the Nigerian government.
In the euphoria of its huge financial leap expectations to Nigeria from the oil refinery business, the project was given very generous concessions by the government, one of which is waivers and free access to foreign exchange from the Central Bank of Nigeria (CBN). This concession agreement deviates from the free enterprise rule of the Free Trade Zone policy of the Lekki Free Trade Zone. The strict rule that was manifestly pursued in respect of all ventures operating at the zone is that every enterprise therein must raise forex by itself and such forex was free from excise duties, as well as nil restriction to the repatriation of the investor’s money if and when the investor deems it necessary. But the Group enjoyed this dealing from the Nigerian government due to expectations from its completion of the refinery and the hold of its founder on the governmental class.
Industry watchers had looked at this sudden veer into petroleum products trade as a huge digression from the known and advertised plan of the Dangote Group. There were strong indications that the Dangote Group’s veer into marketing and distribution of petroleum products might generally redefine the local market.
By this demand by the Dangote Group from the National Assembly’s Joint Committee on the Petroleum Industry Bill (PIB) to have oil import licences given to only companies with active refinery licences, Dangote may be importing an oligopoly into the oil sector. There could be a cloning of the same monopoly that has set the Dangote Cement in a rat race squabble with the BUA Group in that sector.
With its backward integration policy applies to the downstream petroleum sector, watchers of the industry wonder what then happened to Nigerian investors who have voted billions of Naira into the same venture which the Dangote Group wants to be devoted to itself alone? With a refinery construction project in process, why does the Group need to again dominate the importation of fuel business?
Its alibi of a periodic Turn Around Maintenance of the refinery as the reason why it should also superintend over fuel importation lacks cohesion and logic. This is because TAM is a periodic process and when that happens, modular refineries in Nigeria could latch on to this short lacuna. This eliminates the need for the Dangote Group to again be the Lord of the Manor in that subsector of the petroleum business as well.
Monopoly and Dangote Group, it will appear, are Siamese, with all its indications done in conjunction with successive Nigerian governments when, in fact, it should compete with others. In specific terms, the submission of the Dangote Group on the National Assembly’s Joint Committee on the Petroleum Industry Bill, from all intent and purposes, is self-serving, an attempt by a single endeavour and individual to translate itself into the biblical end-time 666 number which gives access to humanity to live and find subsistence. It is also dangerous in the sense that the whole of the being of the nation is placed in the hands of a single entity who then can fiddle with it as it pleases. Government ought to stop a bludgeoning entrepreneurial octopod from swallowing lesser crabs and fishes in the ocean of the petroleum business world in the country.
Ejokparoghene is an Abuja based petroleum industry analyst.
He can be reached on email@example.com
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