Mafia Attempts to Halt the $20 Billion Dangote Petroleum Refinery

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ARTICLE AD BOX

• Middle East crisis boosts demand, prices • Meet beneficiaries of subsidy regime • Plans expansion across Africa • We sell stakes to attract investors • We are not overstretching financially • Civil unrest, policy inconsistency, other risks

By Udeme Akpan, Energy Editor

Aliko Dangote, Africa’s richest man and President of the Dangote Group, has claimed that powerful fuel importers worked hard to impede the construction of the $20 billion refinery.

He said the “mafia” feared that the refinery would change the trade patterns that had encouraged large imports of refined petroleum products into Nigeria, even though the country is a major crude oil producer and exporter.

Dangote said he was determined to end the long queues for fuel in Nigeria, noting that Nigerians sometimes spent hours or even days trying to buy petrol at filling stations.

The refinery project, launched in 2013, faced many obstacles, some allegedly created by entrenched interests in the oil sector.

He added that the cost of building critical infrastructure such as a port, heavy‑equipment facilities and a treated‑water plant was enormous.

Despite the challenges, Dangote pushed ahead with the project to strengthen Nigeria’s and, by extension, Africa’s energy security.

In an interview with the Chief Executive Officer of Norway’s Sovereign Wealth Fund, Nicolai Tangen, monitored by Vanguard, Dangote said: “We looked at oil. Africa produces oil, but many countries don’t refine it. They export crude and import refined products, which drains foreign reserves.“In Nigeria, we had fuel queues for more than 50 years. People queued for days during Christmas just to buy petrol in an oil‑producing country. Government refineries were not functioning properly, so I decided to take the bold step of building a refinery.“We launched the project in 2013. Land acquisition alone delayed us for five years. Some of these obstacles were created by entrenched interests in the oil business what you might call a mafia trying to stop us from solving these problems. But we stayed focused.“When we started, the naira exchange rate was N156 to the dollar. At one point it went as high as N1,900, but we still continued. We had to build our own port because no existing Nigerian port could handle the heavy equipment. Some individual pieces weighed up to 3,000 tonnes. We built roads, water infrastructure and other facilities from scratch. The refinery alone uses 440 million litres of treated water. Our water treatment section covers more than 30 hectares.“About 67,000 people worked on the refinery project. That’s the size of the town where I grew up. Honestly, we were lucky we didn’t fully understand the enormity of what we were building at the beginning. If I had seen the full scale immediately, I might have chickened out.“It was like swimming across the ocean. Once you’re in the middle, you can’t go back, so you keep moving forward. “We got support from African Export‑Import Bank, African Finance Corporation, Zenith Bank, Access Bank, United Bank for Africa and other Nigerian banks. We also had strong support from Standard Bank and Standard Chartered. We were very lucky. And when we completed the refinery, the results exceeded our expectations.”

Middle East crisis boosts demand, prices

According to Aliko Dangote, the crisis in the Middle East has unexpectedly benefited some of the group’s businesses, especially fertiliser, petrochemicals and aviation fuel. He said fertiliser prices surged sharply following the crisis, noting that urea fertiliser, which sold for about $400 per tonne before the crisis, had risen to about $850 per tonne, while demand had also increased significantly.

Dangote added that polypropylene prices also jumped from about $900 per tonne to nearly $3,000 in the United Kingdom, stressing that local production by the group had helped prevent a shutdown of Nigeria’s plastic manufacturing industry. “If not because of the polypropylene we are producing today, all the plastic industry in Nigeria, which they are very huge, they are almost like number two or number three in terms of employment, they would have shut down because there’s no way you can even get it,” he said.

He disclosed that the group’s aviation fuel business was oversold up to the middle of July despite producing 20 million litres daily.

On crude supply, Dangote said the refinery sources about 56 percent of its crude from Nigeria, while additional volumes come from Angola, Libya and the United States. He noted that at one point the refinery imported between seven and eight cargoes of WTI crude monthly from the US, but now relies more heavily on Nigerian crude. “We have to buy now 21 cargoes every month. That’s how big we are,” he said. He further revealed plans to expand refining capacity to 1.4 million barrels per day within the next 30 months, describing the scale as massive.

Meet beneficiaries of subsidy regime

Dangote argued that some groups opposed the refinery because they benefitted immensely from Nigeria’s former fuel subsidy system. According to him, Nigeria spent nearly $10 billion annually on subsidy payments, creating opportunities for traders, shippers and fuel importers to make huge profits from importing refined petroleum products into the country. He also alleged that some individuals who received fuel import allocations earned billions of naira and viewed the refinery as a threat to their businesses. “These are the people that are not agreeing for us to settle down because they believe that, no, we are coming here to displace them, of course, that’s what we have done now,” he stated.

Plans expansion across Africa

Dangote said the group is considering building additional refineries across Africa to reduce dependence on fuel supplies from the Middle East. He listed countries such as Uganda, Tanzania, Kenya and Rwanda as potential locations for future investments, adding that a refinery with a capacity of 650,000 barrels per day could serve markets as far as Ethiopia.

The businessman disclosed that the group currently has investment plans