The Big Question In The Face Of New Oil Refineries & Potential Duopoly Of Dangote/BUA

By Chidiebere Nwobodo

I have observed that out of all the privately-owned establishments that obtained licences to build petroleum refineries in the last few years, only the duo of Aliko Dangote and AbdulSamad Rabiu have shown signs of commitment in this direction.

While BUA Group has concluded plans with its foreign partners, and will hit the ground running very soon, to begin its proposed 200,000 barrels-per-day oil refinery in Akwa Ibom, Dangote’s 650,000/day Oil Refinery and Petrochemical Plant are almost at the verge of completion, at Ibeju-Lekki, Lagos.

Dangote Oil Refinery is over 80.3 per cent completion—according to recent report released by Department of Petroleum Resources (DPR), and is billed to resume full operation in the first quarter of 2021. When it comes on stream, will be the largest refinery in Africa.

My million-dollar questions are: where are southern billionaires, entrepreneurs, investors and oil moguls? What are they doing? Where are the likes of ABC Orjiakor of Seplat Petroleum Ltd; Prince Arthur Eze of Atlas Petroleum International; Mike Adenuga of Conoil Ltd; Femi Otedola of Forte Oil and Geregu Power; Captain Emmanuel Iheanacho of Integrated Oil and Gas Ltd, Folorunsho Alakija of Famfa Oil Ltd, etcetera?

Why I decided to discuss this issue is that, tomorrow those people that refuse to make wise and bold investment decisions today and take its attendant risks, will be first to cry blue murder of “monopoly and northern domination”. When southerners are reluctant to invest in a sector, those who take the risk, will definitely dominate there in the future—and possibly dictate the tune.

You must not build 200,000/day or monumental 650,000/day refineries like BUA Group and Dangote Group, respectively. You can get licensed for 30-50,0000 capacity refineries—depending on your ability. Mind you, you don’t need to have all the money to start: you can engage foreign partners and give them some stakes in your proposed refinery, thereby increasing your chances for funding via loan or grant and expertise.

I am still surprise why major oil producing states like Rivers, Akwa Ibom, Delta, Bayelsa are not thinking in this noble direction, yet we are making empty noise on devolution of powers aka restructuring. If an individual can build refinery, what stops an oil producing state from initiating one. Akwa Ibom State floated Ibom Air in the aviation industry, and it is doing very well. Why can’t this feat be replicated in the ownership of oil refineries?

Messrs Aliko Dangote and AbdulSamad Rabiu have huge stake of dominance in the commodity market. They are taking their age-long battle of supremacy to refining of petroleum products. From cement production to sugar refining and now oil refineries.

Orient Petroleum Ltd that obtained licence to construct 55,000 capacity refinery since 2004 is still hibernating in the doldrums. The same story of failure with some of these portfolio investors who are more interested in importation of refined petroleum products and collection of subsidy than building new refineries in the country.

When Dangote Oil Refinery or BUA Refinery start controlling greater stake in the downstream sector, southerners should not cry of monopoly and domination—because yours sincerely, will not join that pity-party to play victim card. Why we view oil as a vanquishing commodity, these entrepreneurial Titans still believe that building oil refineries is a good investment.

In the foregoing context, when these duo finished building billion-dollars worth of refineries, like every other businessmen, you don’t blame them when they start lobbying for an embargo to be placed on imported petrol. No investor will be happy to go through the difficult terrain of erecting such gigantic projects and watch quick-money importers to rubbish his efforts—by extension, keep making Nigeria an import-dependent nation.

Before you brand me a capitalist apologist, where will much-needed job opportunities come from if we don’t encourage local production and discourage importation? How will naira stabilize when huge chunck of our foreign reserves is expended on PMS imports?

If you were the government, will you prohibit importation of refined petroleum products to encourage the likes of Dangote Group and BUA Group—building oil refineries in Nigeria or allow importation to continue killing your local manufacturing capacity?

This is how “monopoly and domination” begins. Foresight is the first acumen of a great entrepreneur. You don’t see the future with your eyes but mind. Faith is taking the first step even when you don’t see the entire staircase, apology to Martin Luther King, Jr.