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Dangote Defends Diesel Quality and Addresses Monopoly Concerns |
Alhaji Aliko Dangote, President of Dangote Industries, has refuted claims that the diesel produced by Dangote Refinery has the lowest sulphur content in West Africa. He addressed these criticisms during a visit by a delegation from the House of Representatives to the refinery in Lagos.
Dangote also tackled concerns about monopoly in the industry.
"Another complaint was about the initial drop in diesel prices. Even at 650-750 PPM, our diesel quality was superior to imported fuel. Vehicle issues are due to poor-quality imported fuel. We stand by our quality, and you can verify it by checking samples from filling stations," said Dangote, Africa's richest man.
Previously, Farouk Ahmed, Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), stated, "In terms of quality, the AGO (diesel) from Dangote Refinery has the lowest sulphur content in West Africa, at 50 parts per million (ppm). Dangote Refinery and other major refineries like Waltersmith Refinery produce between 650 ppm and 1,200 ppm, making their quality inferior to imported diesel."
Ahmed also dismissed allegations that the refinery's operations were being hindered by a lack of crude oil supply from International Oil Companies (IOCs).
"There are concerns about the supply of petroleum products nationwide and claims that we were trying to scuttle the Dangote refinery; that is not true," he added. "Dangote Refinery is still in the pre-commissioning stage and has not been licensed yet. It is about 45% complete. We cannot rely solely on one refinery to supply the nation, as Dangote is requesting the suspension of all petroleum product imports, especially automotive gas oil (AGO) and jet kero, directing all marketers to the refinery."
Ahmed explained that relying on a single refinery is not ideal for the nation's energy security and market stability due to monopoly concerns.
During the House delegation's visit, Dangote addressed these issues: "Regarding diesel quality, we started with 600-700 PPM because it was a new plant. Now, our production is at 87 PPM, and by the end of August, it will be at 10 PPM. I invite the House leadership to set up a committee to take samples from fueling stations and our production line to verify quality. All the test certificates being circulated could be fake, so it's essential to have a reliable testing process."
On the issue of monopoly, Dangote said, "If we are questioned about how Dangote can supply the market, consider the 4 billion Naira that NNPC spent on activating their refineries in Kaduna, Warri, and Port Harcourt. If their refineries are operational, we cannot be considered a monopoly. They are actually more powerful than us, so we cannot truly be a monopoly. Regulators have given excuses to issue licenses for bad products under the guise of avoiding monopoly. If NNPC is the sole importer of PMS, why are they not considered a monopoly? We came to save the nation, and it's unfair to label us a monopoly. We planned to start sales next year but are avoiding starting now to avoid further monopoly claims. We adjusted the diesel price to 1,200 Naira due to high profit margins. Even with the current exchange rate, diesel remains below 1,200 Naira, justifying our pricing. Claims that we sold at an incorrect price are untrue. We are also selling in Naira to lower prices, despite NNPC only accepting dollars. Our primary interest is Nigeria's growth, as our growth is tied to Nigeria's."
Regarding the NNPC stake in the refinery, Dangote explained, "One billion dollars, which is about 7.2% as a deposit, was agreed upon. We also granted an additional year, which expired on June 30. On June 4, I asked the group CEO about their plans, and he mentioned they want to remain at 7%, which means they won't be able to pay. They notified us, but we have yet to receive anything in writing."
On other challenges, Dangote said, "People often misunderstand the nature of this project. Over the last seven years, we went through 31 projects, and only three are here. Most of the funding was our own, as we avoided project financing due to stringent requirements. The collapse of the Naira from 156 to 1,500-1,600 exacerbated the pressure. Despite COVID-19, our international bankers did not agree to waivers or delayed payments, forcing us to continue payments throughout. The 70% payment mentioned was due to the long-term struggle. We experienced a significant loss of over $600 million due to delays, including a three-and-a-half-year delay by Governor Amosun of Ogun State. We faced substantial delays from 2013 until 2017, leading to financial losses. During this period, we suffered a loss of over $600 million because we could not return the borrowed money. We had already paid financial advisors and had to keep faith that the project would succeed. Eventually, we secured a license with the help of President Jonathan, despite initial resistance. The total amount allocated from the Central Bank was $2.7 billion over 13 years (2013-2023), including interest and principal repayments. An additional $200 million in forward allocations is still pending. Dangote Industries brings its dividends back to Nigeria, so there's no depletion of Nigerian resources. The notion that Dangote's major projects depleted Central Bank funds is incorrect."
