Aliko Dangote, Africa’s richest man, has expressed his willingness to sell his $20 billion oil refinery to the Nigerian National Petroleum Corporation (NNPC) Limited. This development comes amidst ongoing disputes with regulatory authorities and challenges in securing crude supplies.
Highlights
- Dangote’s Proposal: Offers to transfer ownership of his oil refinery to NNPC Limited.
- Refinery Operations: Began in January, facing challenges with crude supplies, operating above half capacity.
- Equity Dispute: NNPC’s stake reduced from 20% to 7.2% due to unpaid balance.
- Crude Supply Issues: Importing crude from Brazil and the US; exploring options with Libya and Angola.
- Regulatory Conflicts: Accusations of substandard petroleum products and monopoly claims.
Dangote’s Proposal to NNPC
Aliko Dangote has proposed that NNPC Limited buy him out of the refinery, responding to accusations of monopolistic practices.
He stated, “Let them (NNPCL) buy me out and run the refinery the best way they can. They have labelled me a monopolist. That’s an incorrect and unfair allegation, but it’s OK. If they buy me out, at least, their so-called monopolist would be out of the way.”
Operational Challenges
The refinery, which started operations in January, has been operating just above half its capacity due to difficulties in securing adequate crude supplies within Nigeria.
Despite being Africa’s largest oil producer, Nigeria faces issues such as theft, pipeline vandalism, and low investment, which have forced Dangote to import crude from distant sources like Brazil and the United States. The refinery aims to roll out its first petrol to the Nigerian market in August.
Equity Dispute with NNPC
Earlier, Dangote announced that NNPC Limited’s stake in the refinery had been reduced from 20% to 7.2% due to its failure to pay the balance. This reduction has intensified the ongoing conflict with regulatory authorities in Nigeria.
Crude Supply Exploration
To mitigate supply issues, the refinery is in talks with Libya to secure crude oil for its 650,000 barrels per day (bpd) plant and is also exploring options to source oil from Angola. Dangote’s senior executive, Devakumar Edwin, revealed these discussions in an earlier interview with Reuters.
Regulatory Conflicts
Nigeria’s Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) recently claimed that the sulphur content in Dangote’s gasoil exceeds the required limit of 200 parts per million (ppm). However, Dangote refuted these claims, asserting that his refinery produces high-quality petroleum products.
Impact on Future Projects
Dangote has now shelved plans to develop a new steel plant in Nigeria after the government accused him of attempting to establish a monopoly with his new refinery. This move reflects the broader implications of the ongoing regulatory conflicts and market challenges the Dangote Group faces.
