Dangote: How local and International Cartels tried to stop my $19bn Refinery Project in Lagos

Dangote: How local and International Cartels tried to stop my $19bn Refinery Project in Lagos

The President of the Dangote Group, Aliko Dangote, has said the company is expanding the storage capacity of its refinery by 600 million litres.

 

Dangote spoke at the Afreximbank Annual Meetings and AfriCaribbean Trade & Investment Forum in Nassau, The Bahamas on Wednesday.

This, according to him, will push the facility storage capacity to 5.3 billion litres.
The Dangote Petrochemical Refinery refinery currently has 4.78 billion litres of storage capacity for refined petroleum products.

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Asked to speak on whether or not his refinery would crash the pump price of petrol, which currently sells at around ₦700 per litre, Dangote gave no affirmative answer, but he quickly recounted how the price of diesel fell from 1,700 to ₦1,200 when his diesel flooded the market.

 

“The issue of gasoline is certainly a different issue. That one is being dealt with by the government. But let me give you an example. In the diesel, which the industries, transporters and everybody consume; when we first started, it was ₦1,700, and the dollar conversion was about ₦1,200 then. Immediately when we started, within two weeks we brought down the price to ₦1,000. We took it from ₦1,700 to ₦1,200 and from ₦1,200 to ₦1,700, we have given more than 60 per cent drop in price.

“With the currency now back up to about ₦1,500 per dollar, the price is still below ₦1,200. That’s a big improvement, from ₦1,700 to ₦1,200. And the diesel is available, we are not living from hand to mouth anymore,” Dangote replied when asked about a possible petrol price cut.

 

The business mogul said the refinery would be a strategic reserve for refined products.

“The country doesn’t have strategic reserves in terms of petrol, which is very dangerous. But in our plant now, when you came, we had only 4.78 billion litres of various tankage capacity. But right now we’re adding another 600 million.

“So effectively, as we go forward, the refinery will be the strategic reserve of the country in terms of petroleum products,” he noted.

 

He explained that international oil companies denied him access to their crude because they did not think he could succeed with the 650,000 barrels per day capacity refinery.

“In a system where, for 35 years, people are used to counting good money, and all of a sudden, they see that the days of counting that money have come to an end, you don’t expect them to pray for you. Of course, you expect them to fight back.

“And I think that is the process that we’re now really going through. But the truth is that, yes, the country, the sub-region, and also the continent, of sub-Saharan Africa, need this refinery. So, you expect them to fight through non-supply of crude, non-purchase of the product, but I think it’s all temporary. We’ll get there,” he added.

 

Dangote has been importing crude oil from the United States to get feedstock for the refinery.

The Kano-born businessman added further that Nigeria has for years been importing dirty fuel into the country.

 

Dangote asked the Federal Government to enforce regulations stopping the importation of dirty fuels.

According to him, dirty fuels have been responsible for many cases of cancer in Nigeria and Africa.

 

Speaking of imported fuel, he said, “It is high sulfur, very polluting and also when you look at it, especially in Nigeria, in the past few years, we’ve been having cases of cancer, and most of these cases of cancer have to do with the bad fuel that we’ve been using. So, I will advise even here, you should check the quality of what is being dumped in your region in The Caribbean.”

 

He spoke further that Nigerian crude oil attracts the most premium, yet the nation imports the dirtiest fuels.

Asked if there is no regulation to check the quality of imported fuel, Dangote reported, “Now there is regulation, so it is upon the regulators to enforce the regulation.”

 

When fully operational, Dangote disclosed that the refinery would supply cheaper fuel to the Caribbean, saying the price of fuel in that area is expensive.

He planned to set up a terminal in the region to give them access to cheaper energy.

 

“I don’t know the exact price but I know that the price in the Caribbean in terms of petroleum products is very high. So, we produce it cheaply, we can always bring it here, we can set up a terminal and we will be able to feed their needs.

“We have a bilateral agreement with them and bringing in stuff from there is not more than 18, 20 days maximum. Once we set up a terminal, they will have very cheap oil. They will have cheap energy. By having cheap energy, their economies will grow faster,” he maintained.

 

Dangote recalled that he was once persuaded by a former Minister of Energy in Saudi Arabia, Khalid Al-Falih, to shelve the idea of building a refinery. However, he said he told the former minister that he did not need his advice.

“Four years ago, I was in Saudi Arabia during the fasting period and I was invited for the breaking of the fast, Dr Falih, who used to be the Minister of Energy invited me to come and break the fast with him and I went there. He just said, ‘Aliko, I heard that you’re planning on building a refinery, what capacity?’ I said 650,000. He kept quiet for a while and said, ‘You know just about 120km from Mecca, we are building one and I think I would like you to go and have a look. We as Saudi Aramco, are facing a lot of challenges and, we are proceeding with it, but my advice to you is not to do it because normally, refineries are built by major oil corporations or sovereign countries.’

“I said, ‘But Your Excellency, unfortunately, we have already started, so I’m not looking for am advice.’ That was really how we continued,” he recounted.

 

Dangote revealed that both local and international cartels, which he described as “mafia”, made repeated attempts to sabotage the $19bn refinery project located in Lagos.

“Well, I knew that there would be a fight. But I didn’t know that the mafia in oil, they are stronger than the mafia in drugs. I can tell you that. Yes, it’s a fact,” he said.

 

Dangote, who described himself as a fighter, said they tried all sorts to stop him.

“As a matter of fact during the COVID period, some of the international banks were looking forward to making sure that they push us into default of our loans so that the project will just be dead. And that didn’t happen with the help of banks like Afreximbank,” it was stated.

 

He explained that he had paid off $2.4bn of the $5.5bn loan for his $19bn Lagos-based refinery.

“We borrowed the money based on our balance sheet. I think we borrowed just over $5.5bn. But we paid also a lot of interest as we went along, because the project was delayed because of a lack of land, also the sand-filling took a long time. Almost five years or so we didn’t do anything.

“We started in 2018. We borrowed that much. We have, of course, paid interest and some principal, about $2.4bn. We’ve done very well. We now have only about $2.7bn left to be paid. So we’ve done very well for a project of that magnitude,” he said.

 

On the industries being energy independent, Dangote posited the refinery and his other companies are not putting any pressure on the grid, though he suggested that power production should be the business for other people.

“We don’t put pressure on the grid. Like us now, we produce about 1,500 megawatts of power for self-consumption. But if this thing is beneficial and it makes sense, there will be people who will concentrate on actually generating the power so it won’t be part of your cost. There are a lot of people that are doing industrial parks, and I think Afrexim Bank is involved in these parks in terms of funding; that will help. It means that once you come, you are just going to plug and play,” he added.

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