The President of the Dangote Group, Aliko Dangote, is ordinarily a calm, ever genial-looking corporate icon. He rarely loses his composure. But in the last few weeks, the richest man in Africa had been forced by disconcerting circumstances relating to his $20 billion, 650,000bpd-capacity Dangote Refinery and Petrochemicals investment to go through the emotional discomfiture of blowing hot and cold!
It was a highly disconsolate Dangote who was literally begging, almost genuflecting, in Abuja last Tuesday that the Nigerian National Petroleum Company Limited(NNPCL) and oil marketers should stop importing petroleum products since his behemoth can conveniently meet domestic demands.
He was part of a delegation of the Implementation Committee on Crude Oil and Refined Products Sales in Local Currency, who met with President Bola Tinubu at Aso Villa. At the meeting were the committee chairman, who is also the Minister of Finance, Wale Edun, and the Group Chief Executive Officer of NNPCL, Mele Kyari.
Yet, in another context, Dangote, who waxed completely conciliatory at the Abuja meeting, had recently been so peeved by the mercurial and chameleonic dispositions of the oil regulators that he instituted a legal action against one of them— the Nigerian Midstream and Downstream Petroleum Regulatory Authority(NMDPRA) at the Federal High Court, seeking N100 billion in damages, for continuing to issue licences for the importation of refined products.
He claimed in the suit that Dangote Refinery’s production exceeds domestic levels, rendering imports unnecessary. He alleged that these imports are sabotaging his refinery’s operations by flooding the market with refined products which his plant is already producing without shortfalls.
However, it was a different Dangote in Abuja last Tuesday who was talking in a kind of tempered tone tailored to conciliate. “I have a refinery,” he started. “I’m not in retail business. If I’m in retail business, then you can hold me responsible. But what I’m saying is that the retailers should please come forward and pick(petrol). If they don’t come forward and pick, what do you want me to do?
“So, I’m expecting either the NNPCL or the marketers to stop importing; they should come and pick because we have what they need. And as they move, I will be pumping,” Dangote said persuasively in his interaction with newsmen after the meeting.
This is rather an infernal incivility. Must Dangote be forced into this level of desperation before the oil regulators could stop this noxious, shameful business of perennially importing petroleum products that are being refined locally by our own, on such a large scale that can conveniently meet domestic demands?
Dangote is no longer talking about the suit. He may have been talked out of it. But it is difficult to situate the obduracy of NNPCL, NMDPRA and other regulators on the Dangote matter other than to link it with the utter perfidy of the powerful but shadowy ‘fuel import cabal’.
Even as Dangote was making his plea in Abuja on Tuesday, a vessel conveying precisely 20,115,200 liters of imported fuel was being expected to berth the following day at Tincan Island. Another one carrying aviation fuel was also being expected to berth at the weekend.
From Dangote’s visage at the Abuja meeting, the man is ostensibly being driven into exasperation as he battles to protect his refinery against the villainous activities of the ‘fuel import cabal,’ who are not happy that the refinery has come to spoil business for them.
“I don’t know whether you understand what it takes to keep half a billion liters in our tank,” Dangote told newsmen in Abuja. “It’s costing money everyday. If I will be able to collect the naira, I can actually charge somebody 32 per cent in interest. Right now, that’s what I’m losing.
“And we are talking about N500 million. I mean, we are not printing money. But the issue is that if they come and collect(fuel), you will not see any queues in the filling stations.” He said the refinery can produce over N30 million liters per day at full capacity and currently holds 500 million in reserve enough to supply the country for over 12 days without imports.
Dangote revealed that the Abuja meeting resolved that the naira-based crude and petroleum transactions would now employ a market-driven exchange rate and competitive crude pricing. He said President Tinubu directed that both NNPCL and independent marketers should start purchasing fuel from his refinery on those terms, with AfreXim Bank as the settlement facilitator between Dangote, other refineries and NNPCL.
The new arrangement is a complete reversal of the off taking deal, which the NNPCL struck with Dangote Refinery, under which the former would buy fuel from the latter as the sole offtaker, subsidize the cost for Nigerians if the price from Dangote is higher than the prevailing market rate.
But the national oil firm soon abandoned the arrangement that would have kept fuel price relatively stable, citing a $6.8 billion debt. The market was completely deregulated shortly after. Fuel price became market-driven. This is what has opened the floodgate of incessant fuel price increases.
Only last Tuesday, NNPCL quietly effected a hike in fuel prices, the third in two months. It raised the retail price of petrol in Abuja to N1,060 from N1,030 per liter, an increase of N30. In Lagos, it hiked the price from N889 to N1,025, an increase of N27. This, as noted earlier, is sequel to the government’s deregulation policy, which allows prices to fluctuate based on the demand and supply dynamics.
The price was hiked on October 9, 2024 from N897 to N1,030. Also, on September 2, 2024, it was raised from N617 to N897. Since the removal of fuel subsidy in May, 2023, the NNPCL has gradually hiked the pump price of petrol from N189 in Lagos to N1,025.
The deregulation arrangement continues now that it is resolved that NNPCL and the marketers would now be buying from Dangote Refinery consistently. Yet, leaving fuel prices to flounder against the headwinds of market forces, like we have consistently posited, remains a precarious gamble, which will continue to push up the prices, especially because of the continued depreciation of the naira.
That was why analysts were alarmed at the latest hike, which ought not to be, because crude oil prices in international market dropped from $78 to $72 per barrel. So, fuel price ought to have reduced rather than shoot up, but for the naira’s depreciating value against the dollar.
The Organised Labour, in its reaction to the latest hike, warned that incessant petrol price increases are pushing Nigerians to the limit. It also warned the government to be wary of the omnious silence of Nigerians in the midst of excruciating hardship and misery being inflicted on them. Even a goat can bite if you push it to the wall.
A labour leader anonymously told a medium in Abuja that the government is gradually pushing the masses to revolt against the establishment. He said: “We had thought that the Federal Government would halt the incessant increases in the pump price of petrol after our October 16, 2024 meeting, where we made the government’s representatives, led by the Secretary to the Government of the Federation, to understand the level of frustration, hunger, misery and general restiveness across the country.
“This latest increase is one too many and a bitter pill to swallow. The increases are pushing the citizens to the limit. Across the country, people are just waiting for something to ignite the fire. Increasingly, the government is providing the fuel that will ignite the fire. What is probably left is someone to light the matches. We(Labour) have been urging the government to jettison the anti-people policies and lessen the pain, suffering, hunger, poverty and frustration to no avail.”
The fuel price hikes have led to further increases in transportation and production costs, decline in household income and purchasing power. They have plunged the larger population into further misery, hunger and poverty, like the labour leader observed. Only those in government or power are perhaps not feeling the pinch.
Many car owners have abandoned their vehicles due to their inability to continue to fuel them. Public commuting is now a punishing drudgery. Tumultuous crowds are now daily stranded at bus stops for hours waiting for buses that are either not coming or doubling the fares. Traffic is now light on most roads as commercial transporters are increasingly abandoning the business for inability to break even.
It is befuddling that President Tinubu, as the de facto petroleum minister, now appears to be acquiescing to the shenanigans of the NNPCL, other oil regulators, the implacable ‘fuel import cabal’ and the retinue of bad or inept advisers surrounding him and unwittingly allowing them to upend the system and entrap his administration in a tinderbox.
It is highly imprudent for the government to have trodden the path of complete deregulation of the oil market in an economy with a weak or depreciating currency like ours. It is simple economics that inflation will continue to spiral in such a system, leading to astronomical prices of goods, especially as fuel prices intrinsically affect all other facets of our national life.
Now, the indefensible price increases are pushing things into an unprecedented slough, increasingly casting the Tinubu administration as totally unfeeling and insensitive. We are, therefore, admonishing President Tinubu to do a rethink before things go out of hand completely.
The way to go is for the administration to drastically rejig its fiscal spendings, mop up funds from the fuel subsidy withdrawal savings, jettison the impolitic deregulation policy and return to the off taking arrangement with the Dangote Refinery. Government should bring down fuel prices by subsidizing purchases from Dangote through NNPCL. Gradually, the prices will stabilize, inflation will come down and costs of living will follow suit naturally.
Then, to prevent Dangote from becoming a private monopoly, the government should encourage BUA’s 200,000 bpd refinery and allow other like-minds who desire to build more private refineries to do so by creating the enabling environment for it.
This is in view of the fact that the nation’s refineries in Port Harcourt, Warri and Kaduna have not been allowed to come on stream despite the billions of dollars that have been dissipated into their convoluted and interminable turnaround maintenance(TAM).
In the final analysis, the shameful circus called fuel imports should stop forthwith. The home model typified by Dangote Refinery and other local refineries should be fully exploited and perfected.
