“Corruption remains one of the most significant obstacles to the progress and prosperity of our nations. It undermines the very fabric of our societies, erodes public trust, and impedes equitable distribution of resources” — President Bola Tinubu in an address to ECOWAS leaders
A senior cousin of mine died recently, aged 96. During the condolence visit to his family, the wife, aged 89, kept repeating to every visitor: “The wicked have done their worst”.
To me, it was absolutely hilarious. But, none of us, younger, was so uncouth as to laugh in my auntie’s face. On many occasions, our refusal to face the truth staring us in the face is also a form of corruption. We thereby avoid having to take the difficult decisions required to make real progress.
Dangote Refinery is the most obvious case study. But, it is not the only one. Permit me to make a categorical statement which anybody not self-delusional should be able to figure out for themselves; anybody includes Alhaji Aliko Dangote.
The refinery will not receive 650,000 barrels of crude from Nigeria for a long time to come – if ever. The reasons are so clear that only corruption of thought prevents the Federal Government, the Nigerian National Petroleum Company Limited, NNPCL and Dangote, as well as his supporters, from admitting the truth.
Crude production and commitments make it impossible
“Producers decline sale of 460,000bpd to Dangote, others” – News Report, August 21, 2024
If Dangote wants to know who “the wicked who have done their worst” are, he would have to start from the Presidency, to the Ministry of Petroleum Resources to NNPCL. In one way or another, they delivered the dagger thrusts in the back to Dangote, despite his generous contributions to their campaigns. Self-righteous Obasanjo, as usual, established the template fusing the office of President with that of Minister of Petroleum Resources. He performed woefully on both and left a great legacy of corruption in the two roles. One of the precedents he left behind, making it impossible for Dangote Refinery to ever receive 650,000bpd of crude from Nigeria’s production was the mandatory allocation of crude oil to NNPC’s four refineries as the table below clearly indicates.
Those in government were already aware that 445,000 bpd was already committed to the four scraps we call refineries when Dangote went to discuss with them about his refinery needing 650,000 bdp.
January – July crude oil production
“Oil production fell in Q2 – NBS” – News report, August 28, 2024
The report informed those who want facts instead of fiction, that “The nation in the second quarter of 2024 recorded an average daily production of 1.41 million barrels per day (mbpd)”. In the first quarter, the production was 1.57 mbpd.
Several questions arise. First, with a firm commitment to refineries of 445,000 bpd, how much will be left for the FG, if 650,000 bpd is allocated to the Dangote Refinery? Furthermore, with several other Nigerian refineries springing up, and just as entitled to Nigerian crude, how many more thousands of crude would eventually be allocated to domestic refineries? Remember that 1.095mbpd would have been committed to meet the requirements of just NNPC and Dangote refineries – leaving only 315,000 bpd. Would the 315,000 enough for the FG to export and earn badly needed foreign exchange? The clear answer is NO; and the FG, NNPCL and Dangote are aware of this.
To start with, not all the 1.41mbpd belongs to the FG or NNPCL. In fact, less than half is theirs. So, all that the Dangote Refinery could have legitimately counted on receiving, if it started operations in December 2023, as previously advertised, would have been less than 300,000bpd. Unfortunately, even that volume would not be consistently delivered to the refinery. Here is why.
Dangote swindled by Buhari and NNPCL
“It was beautiful and simple; as all truly great swindles are” – O Henry, 1862-1910. VBQ p 239
Alhaji Dangote is no fool; otherwise he could not have become the richest man in Africa for years. But, even the best in every game sometimes blunder.
Dangote consulted with all the people that mattered in the Buhari government before embarking on the project. The most important individual was the Minister for Petroleum Resources; who also was the President – Buhari. He must have been assured of supply of 650,000bpd before proceeding. He believed them. That might turn out to be his greatest mistake in an otherwise string of astonishing successful decisions.
He was probably assured that Nigeria would be producing two million barrels per day by the time the refinery was ready for supplies. He believed them. Deliberately, it was not disclosed that 400,000bpd was being stolen and there was no respite in sight. They also “forgot” to tell him about 445,000bpd committed to NNPCL refineries. Furthermore, the Buhari administration had borrowed huge amounts of money, undisclosed to Nigerians, using future crude oil supply as collateral. Reliable insiders inform me that nearly 300,000bpd is involved in those deals.
Finally, as pointed out before, less than half of crude produced in Nigeria belongs to the FG. So, even if the country produces 2mbpd, only 1mbpd belongs to the FG. Add up all the commitments and it should be clear that, had the FG been an individual it stands accused of 419. Yet, Dangote believed them even as he was being serially swindled.
“Producers decline sale of 460,000bpd crude to Dangote” – News report, August 21, 2024
So, where will 650,000bpd come from to supply Dangote?
Unforeseen problems
Dangote must have dismissed the possibility of competitors once his giant refinery was approved. The assumption was understandable. With a refinery holding 650,000bpd of crude oil processing capacity, and the crude oil supply guaranteed, there would be no need for another refinery. At any rate, there would be no domestic crude for any challenger to process. Well, that has turned out to be a wrong assumption. At least four other refineries would be ready to come up; and they also are requesting for crude supply from the FG as a matter of right. The FG/NNPCL has a whale of a problem on their hands regarding finding the crude to supply the new refineries.
NNPCL has also taken loans, using future crude as collateral. That will not be available for allocation to Dangote refinery. Virtually all the independent crude producers operate with loans to be repaid with future crude production. The FG cannot compel any of them to breach their contracts, just to supply Dangote refinery.
Just in case you don’t know where I am going; let me tell you; Dangote Refinery might never receive 650,000bpd of crude from Nigeria.
•Written by Dele Sobowale
