Unaccounted NLNG Dividends Could Have Built World Class Refinery

VP Osinbajo in middle during inspection of Dangote Refinery

A reflection on Dangote’s 12 billion dollars refinery, one major thing that comes to mind is how the mismanagement of oil revenue denied the country the opportunity to own many times that complex that aims to be World’s largest refinery.

The refinery is a tall dream tackling four major aspects of diversification in the oil and gas industry.

These are crude oil refining, petrochemicals, fertilizers and gas.

Located in the remote side of Ibeju-Lekki, Lagos, and sitting on an expanse of land that is said to be 8 times the entire Victoria Island in Lagos, the entire refinery is expected to be completed in the first quarter of 2019, while the gas system which runs from Rivers State , through Ogun State to Lagos, would be delivered in 2018.

Dangote had told journalists last Month when the Vice President Yemi Osinbajo inspected the complex, that it would provide market for the host country, and possibly the entire Africa.

“ The entire Africa has only a few functional refineries. These include South Africa, Egypt and Algeria. Our own here in Nigeria is operating at less than 10 percent capacity. So there is huge market for us. We don’t have any issue in selling our products”.

Many have said the Dangote refinery could not have come at a better time than now, when the diversification of oil and gas opportunities in the wake of fallen oil price is the trend and Nigeria which could have been a major competitor is too broke to even run the government, let alone having such huge capital in building refineries.

On one side, It is an advantage for Nigeria who for over fifty years have been importing refine crude at huge cost , involving the depletion of the country’s foreign exchange through naira to dollar transaction.

What that means is that crude would be refined at home, thus saving the cost of oversea transportation.

Confirming this, Dangote said, “40 percent of our foreign exchange go into importation of petroleum products. So if we refine at home, we don’t need to import. And when we sell to industries, they will pay us in naira. That way, we create jobs and there is value addition. What we have done over the years is export jobs and create poverty here”.

Although, the coming of the Dangote refinery will bring the country relief , looking at the system critically, the country is only shifting its dependence from one private entity to another.

If only resources were well managed and the nation’s oil and gas industry ran professionally for the over 50 years that the nation has been in business, by now, the country would have its own World refinery.

For instance, a study of the 2014 NEITI audit report of the oil and gas indicates that during the years under review, revenue loss alone would be enough to deliver two times the Dangote refinery.

The monies included, 14.1 billion dollars dividends paid to the NNPC by the NLNG between 2005 and 2013 which NEITI said was not remitted to the Federation account.

A few others were over $5.96 billion loss to offshore processing, $3.787 billion outstanding revenue and $599.8 million due to underpayment of royalties by oil companies.

Many have argued that if all of those monies were accounted for, the country would have had its refinery and the one by Dangote would only add to the number.

And when that is done, the  government oil and gas company would employ much more jobless Nigerians, than the 1,500 employees, and over 100,000 indirect employments that the Dangote refinery is billed to employ.

I am only trying to make  common sense.