Dangote Faces Regulatory Challenges Amidst Controversy over Refinery Quality

The disagreement between Dangote and the Kogi State Government, led by former Governor Yahaya Bello, regarding the rights and royalties from Dangote Cement in Obajana appears minor when compared to the ongoing issues involving the Dangote refinery.

Aliko Dangote understands well that wealth and comfort can be peculiar companions, often at odds in the relentless pursuit of success. This lesson has especially come to light in his ambitious venture to establish a refinery.

The story takes us back to the latter days of the Obasanjo administration when the government sold two of Nigeria’s struggling refineries—Port Harcourt and Kaduna—to Blue Star, a consortium led by Dangote, for $670 million. However, the deal wasn’t as straightforward as it seemed.

In 2007, the administration of Umaru Musa Yar’Adua reversed that decision under pressure from labor unions, claiming that the assets were “national patrimony” that shouldn’t be sold indiscriminately. At that time, both refineries operated at less than 20 percent of their capacity, and there were no prospects for improvement.

Despite the setback, Dangote remained resilient, returning home with his refund. Six years later, he announced plans to build a private refinery, initially in Ogun State and later shifted to Lagos, boasting a capacity of 650,000 barrels per day, which surpasses the total capacity of Nigeria’s four refineries combined.

Now, Dangote’s single-train refinery, originally estimated at $12 billion but eventually completed at around $20 billion, finds itself at the heart of yet another controversy. This time, the allegations come not from international oil companies but from within the regulatory framework itself.

The head of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Farouk Ahmed, expressed concerns regarding the safety of the refinery’s products, specifically high sulfur levels. He also suggested that Dangote was attempting to monopolize the industry.

A clever regulator can indeed raise safety and monopoly issues; however, Ahmed failed to specify what the acceptable sulfur levels were or provide evidence of a monopoly when he mentioned other operating refineries like Waltersmith and Aradel.

The situation worsens when considering Ahmed’s admission that neither his agency nor the Nigerian National Petroleum Corporation (NNPC) has a laboratory to confirm these claims. This raises significant questions about the reliability of the allegations being put forth.

Despite the challenges faced, the Dangote refinery has been the focus of many high-profile endorsements. The Pragmatic Shareholders Association of Nigeria, led by Bisi Bakare, publicly defended Dangote against the accusations, reminding everyone of his substantial contributions to national development, including tax payments and job creation.

Other notable figures, including Akinwumi Adesina from the African Development Bank Group, billionaire Femi Otedola, and political figures like Atiku Abubakar and Peter Obi, have also voiced their support for the Dangote refinery amidst the ongoing scrutiny.