Between Dangote Refinery and NNPC

Between Dangote Refinery and NNPC

Sunday, September 18, 2022 2:00 pm

Dangote Refinery

By Simbo Olorunfemi

It is difficult to tell which part of the untoward and relentless narrative about the Dangote Refinery project comes from a place of genuine ignorance of what this giant, groundbreaking initiative is all about and that which comes from the mindless, bigoted or ethnocentric assumptions, steeped in our faultlines, often employed to drive these strange conversations.
It is a strange one really, as anyone with as much as a pretence to ‘love’ for country should not find it difficult to appreciate this project for what it is – the most important and singular private investment in Nigeria with the most significant implication, not just for energy security, but national security itself. To think that for the many years Nigeria yearned for alternative to the publicly-owned refineries, not one of the many licences issued gave us a private refinery. So, what is this grudge that some have for the one who not only took the bold step, but decided to do it at such a grand scale.
Unfortunately, even if it is not unexpected, the acquisition of shares in the venture by NNPC has been caught in the same toxic mix, with the narrative being pushed at variance with the facts readily available in the public space.
I have read here of how the government forked out 2.7 Billion dollars from its reserves to bail out a distressed Dangote. A picture of cronyism conjured and graphically painted.
Yet, what transpired between Dangote and NNPC was not as much of a cash transaction as being touted. Of the $2.7 billion agreed upon, one-third of the money will be paid with crude oil, another third from the profit that will accrue from the investment, leaving only a third as cash component.
Apart from the compelling argument for NNPC’s investment on account of the strategic interest of the country and energy security, the business of the business is not only to do with refining but Petrochemicals.
Also, this deal offers a ready outlet for the 455,000 barrels of crude NNPC received for domestic refining, which the company currently trades three-quarters of through the window of the DSDP, but can now be channeled to Dangote in exchange for refined products.
It is difficult to see how anyone can dispassionately interrogate the facts, not assumptions, and not see this as a win-win that it is.

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