If indeed it is true that Dangote Refinery is sourcing crude oil from outside Nigeria, it would be a major own-goal for Nigeria: “Dangote Refinery, Africa’s largest refinery, is set to begin crude oil import from the United States in February…According to reports from Bloomberg, Trafigura Group has brokered a deal to supply Dangote Refinery with 2 million barrels of WTI Midland crude expected to be delivered by the end of next month, marking the first instance of the refinery purchasing non-Nigerian crude.”
If that is the case, the whole construct of stabilizing Naira via Dangote Refinery fades. Yes, you cannot expect the company to import with USD dollars, and sell on Naira terms.
Yet, I have made the point here that the forward-selling of crude oil for immediate cash will deliver a victim, and that victim would be our local refineries. Simply, if we subtract crude oil Nigeria ships to those who gave us loans, as part of repayment, and the little we need to run the affairs of the nation, we may not have enough for companies like Dangote Refinery, based on our production capacity, despite the national obligations to supply them feedstuff.
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Historically, this has happened many times in the nation in other critical sectors. Our federal contracting system does not have a lot of “memories” as we make contracts forgetting previous obligations. Two cases:
Case 1: A company was given permission to build a power plant, and part of the deal was to use existing electricity grid poles to distribute the power. Years later, Nigeria signed another contract with a DISCO, assigning the rights of the poles to the DISCO, forgetting the pre-existing contract. The DISCO then blocked the power company from access to the poles. They went to court…and court is happening as usual.
Case 2: A company was promised gas to power a city-wide power plant by the federal government from a national gas asset. Later, the government sold the asset, without a clause to the new buyer to honour existing obligations. The new asset owner is not interested in working with the local power plant as you can make more money in the international market. Today, that power firm is not operating.
So, as Dangote Refinery was bragging about the assurance of crude oil from Nigeria, I said “Are you really sure?” Today, the company has learnt small lessons. Good enough that it has found alternatives. Good luck Alhaji, you will succeed!
If indeed it is true that Dangote Refinery is sourcing crude oil from outside Nigeria, it would be a major own-goal for Nigeria: “Dangote Refinery, Africa’s largest refinery, is set to begin crude oil import from the United States in February…According to reports from… pic.twitter.com/LJS2kKYPAv
— Ndubuisi Ekekwe (@ndekekwe) January 30, 2024
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Any transaction you analyze in Nigeria, if it’s not screaming fraud, then it is ineptitude. Just look at what we are reading and discussing. Do we even have plans on anything? We just exist without any purpose. We squandered billions of dollars, starved businesses Fx, because we were building a giant refinery. And at the end, we don’t even have crude oil for the said refinery, yet we are explaining it as though it sounds intelligent.
The report stated that Nigeria gets more crude oil as its quota from onshore operations than offshore, that very onshore we receive more is the one that is basically not functioning, with issues ranging from oil theft, criminal activities and lack of investment. Yes, the very thing that guarantees you more supply is effectively disappearing, and what you receive from offshore is not enough to meet your obligations…
What manner of people are Nigerians? We have essentially become a monumental embarrassment to the human race, yet we shrug off everything and carry on as though nothing matters. If Dangote Refinery imports crude oil from the US or elsewhere and then refines, if it sells in Naira locally, where do we keep getting the dollars to import crude for Dangote Refinery?
This is a complete joke.