Dangote’s Refinery: What’s Going On? (Explained Like You’re Five)

Aliko Dangote, https://pin.it/4QheHOYhP

Although Nigeria is one of the main suppliers of crude, we remain an importer of petroleum and petroleum products. Why? We have no way to refine crude within the country.

(It’s like having yeast, eggs, butter, sugar, flour, and water, but having to buy bread because you don’t have an oven.)

So basically, Nigeria sells crude (the ingredients) to refineries (bakers) in other countries, then buys petroleum and petroleum products (bread) back for more expensive (including costs for transportation, and baking)

That said, when Dangote announced the establishment of his refinery, it gave hope to well-meaning Nigerians. It would mean that we could easily cut out the middleman. 

We could refine petroleum within the country, cutting out the exportation and importation costs, leading to a crash in the price of petroleum in Nigeria.

What’s more? The refinery would lead to job creation, as well as positioning Nigeria as an exporter, not just of crude, but of petroleum and its products.

(Simply put, You have bought an oven, and can now just bake bread and eat at home without having to sell to bakers first. And what’s more, the family could even start selling bread too, and your brothers and sisters could work at the bakery!)

That said, the journey has been anything but easy and has led to a lot of conflict between The Dangote Group and the oil sector refinery regulators. 

First, the company has faced problems buying crude from Nigerian producers, forcing the refinery to import crude at unfair prices from international trading arms as far as Brazil and the United States. They were given some of the supply they needed, but they were denied most of it by an organzation called NUPRC

(Imagine after you get the Oven, your mother refuses to sell ingredients to you and insists that if you want to bake, you’ll have to go buy the ingredients from a nearby bakery across the street.)

Also, there is the issue of Nigeria giving other Market players the license to start importing petroleum products as well, which Dangote isn’t too happy with, claiming he can meet the demands of the Nigerian market. 

Farouq Ahmed, https://pin.it/WRnEck8c7

The problem? According to Farouk Ahmed, the head of the Nigerian Midstream and Downstream Regulatory Authority (NMDPRA), That sounds a lot like a monopoly. 

Ahmed also claims that Dangote had requested that Nigeria block the importation of petroleum products, to give his company an upper hand.

(Your mum who did not sell you ingredients is now telling other people  to come and start baking too, and you are not happy because you can bake enough for your whole family, but your mum is saying “Is it only you that should be baking?”)

Now, it’s not the first time Aliko Dangote has faced monopoly accusations. Within a short time, he typically dominates every industry he gets into, and drives up the prices.

In response to this, Dangote has offered to sell the company to the NNPC, if they are willing to buy him out. He has also put a stop to his Steel production plant which he announced earlier this year.

(You now got angry. And told your mother that no problem, she should buy the oven from you, and start baking herself.)

In addition, Ahmed also claimed that Dangote’s diesel is of inferior quality, contained toxic amounts of sulfur, and was not fit for use. To this Dangote retorted that his diesel is “the best diesel in Nigeria.” 

Also, Dangote requested that the name of the laboratories where his diesel was tested be disclosed and that in addition, new samples be collected and another test be performed. To this, Ahmed had no response.

It is important to note that when newer tests were eventually carried out, Ahmed’s claims were found to be untrue. The diesel produced by Dangote’s refinery was shown to actually have way less sulphur content than that of imported diesel.

(Your Uncle now even came to say that not only do you want to be the only person selling bread, your bread is not even sweet, and it is poisonous so you said “Okay o, no problem. Pe, please who ate my bread, and my neighbour’s bread and said that my own is not sweet and isn’t healthy? Let us call a new person to eat the two, and say whose is sweeter.” They now called the person, and the person now ate your bread and they said that your Uncle lied )

Sequel to this, there have been calls for Ahmed, head of the NMDPRA, to be sacked.

https://pin.it/7csQ6NFhi 

Now, in Nigeria, we know very well by now that things can only get worse than they already are, which is how we got to the ongoing spat between The Dangote Group and The Nigerian National Petroleum Corporation (NNPC) which claimed that three years ago, they made a payment of $2.7bn for a 20% stake in Dangote’s company, which is now a 7.2% stake. 

In response, Dangote alleged that they did not complete the payment owed for the 20% stake, thus leading to its reduction.

NNPC then revealed that they were simply monitoring the ongoing establishment of the business before making future investments.

(Your church members, when they heard you were going to buy an oven, promised to give you money, so they’ll own a little less than a quarter of your business. You agreed o but they didn’t now pay you complete money, so you too, gave them what their money could carry inside. Your church members now say “No o, we just said we should see how the business will go before paying the balance)

https://pin.it/54o1FELsy

In all, there seems to be a considerable amount of effort going into opposing the refinery, forcing the Dangote group to face Hurdles at every turn. It seems that certain bodies benefitting from the status quo will do just about anything to prevent approaching change, be it from the public or private sector.

The refinery is set to be the largest in the world that could potentially end Nigeria's importation problem, and even go as far as making us one of the largest exporters of petroleum products in the world. Nigeria could bypass the subsidies, and crash fuel prices to as low as possible according to some speculators. But as most of you saw from the viral video, the man is being frustrated to the point of asking the government and NNPC to buy him out of the market.

On the positive side, the refinery recently began producing fuel and marketing it as a clear and pure magic water of combustion that will change the lives of every Nigerian. How this will affect fuel prices and distribution in Nigeria is still up for speculation as are most thing in the country.