Ben Ekori
John Dryden, a 17th-century English poet and literary critic, painted a picture of the unscrupulous nature of politicians in his time when he stated that “Politicians neither love nor hate.” This description, highlighting the emotionless, soulless, treacherous, and decidedly selfish nature of politicians, can still be applied to businessmen today. The brazen manner in which they pursue profit at the expense of everything wholesome and noble is comparable only to the shameless way politicians abandon principles in pursuit of power.
My ruminations on Dryden’s statement in relation to businessmen were prompted by the report of multi-billionaire Alhaji Aliko Dangote claiming he did not receive any government incentives while building his $20 billion refinery. When I first saw the report, my initial reaction was disbelief; I thought he must have been misquoted. As the news spread across various platforms, I read multiple versions to understand the context. I discovered that in the same address at the Crude Oil Refinery-Owners’ Association of Nigeria (CORAN) summit, he also called on the Federal Government to stop mortgaging the nation’s crude oil in forward sales arrangements.
On the surface, Dangote’s call to end crude oil forward sales appeared altruistic, especially given the Norwegian example he cited, where proceeds from oil are stored in a future fund for future generations. However, a closer look reveals the selfishness underlying his suggestion. According to him, the purpose is “to ensure sufficient feedstock availability” for his refinery. In other words, he is advocating for: “Don’t sell to others so that you can have enough to give me.” It’s worth noting that Dangote has been struggling to pay the premium price for Nigerian crude, which typically sells for about $2 or $3 above the other premium grade Brent.
But that’s just the tip of the iceberg regarding his hypocrisy. The man who calls for an end to forward sales of crude oil has conveniently forgotten that he has been one of the greatest beneficiaries of such schemes. In 2021, when Dangote faced financial challenges funding his refinery project, he sought a bailout from the Federal Government under President Buhari’s administration. The administration tasked the NNPC with finding a solution.
This led to the idea of the NNPC acquiring a stake in Dangote’s refinery. To raise funds for this bailout, the NNPC conducted a crude oil forward sale that generated $1 billion, which was then funneled to Dangote. Three years later, he is now campaigning against forward sales as if it were a crime, simply because he stands to benefit from sufficient feedstock availability.
Beyond this blatant selfishness, Dangote demonstrates shortsightedness by failing to recognize that his interest in having enough feedstock is best served on a sustainable basis, requiring sufficient funds for upstream operators to develop more oil fields and boost overall production. In light of global funding challenges, forward sales are one of the easiest ways for oil companies to raise funds for production growth. If these companies lack funds to invest, the very feedstock availability Dangote desires could diminish, leading to a decline in production and, eventually, a lack of crude oil to supply his refinery.
Dangote’s claim that he did not enjoy any government incentives while building his refinery showcases egotism, selective amnesia, and revisionism. While it is undeniable that the successful execution of such a massive project is a remarkable feat, to claim it was solely his effort, without any government input, is the height of needless egotism.
Perhaps he has forgotten that Nigerians know he benefited from significant import duty waivers on nearly all the long lead items used in constructing the refinery. He may also overlook that he enjoyed a concessionary exchange rate during the dollar-to-naira fluctuations, which helped keep his project costs manageable. These realities indicate a clear case of selective amnesia.
The government’s involvement in the Dangote Refinery was further underscored by former Central Bank Governor Mr. Godwin Emefiele, who stated at the refinery’s inauguration on May 22, 2023, that Dangote had repaid 70% of the loans for the project even before it produced a single drop of refined product. Emefiele’s revelations included the fact that the apex bank provided around N125 billion to Dangote for domestic currency needs and ensured foreign exchange availability for imported equipment. It remains a mystery how a refinery that had not started producing could pay off 70% of its loans so quickly. If that isn’t an incentive, it’s hard to define what is.
From the inception of the Dangote Refinery, the Nigerian government demonstrated a vested interest in the project, offering substantial support for its completion. Dangote has even stated that the government allocated two brownfield oil blocks to him to ensure a steady supply of feedstock for the refinery. Ironically, this same person is now criticizing the government regarding crude oil forward sales, despite having been given the means to secure his own dedicated supply from the start.
It is challenging to grasp Dangote’s definition of incentive. He needs to clarify the kind of government incentive he feels he was denied that prompted his comments. While we await his further explanation, it’s essential to remind him that he does not have the authority to dictate to anyone, especially the government, how and where to sell their crude oil. The Domestic Crude Supply Obligation clause in the Petroleum Industry Act (PIA) does not guarantee that anyone must supply all the feedstock for his refinery, as it contains a willing-buyer-willing-seller clause. If producers lack funds for production, they will not have crude oil to sell, no matter how willing they may be.
If Dangote believes that producing the crude oil he needs for refining doesn’t require funds, he should focus on developing the brownfield oil blocks allocated to him instead of engaging in baseless activism.
Ekori, an energy sector and public affairs analyst, writes from Port Harcourt.
