Recently, on one of those social media perambulations we sometimes indulge in, I came across a cartoon that resonated deeply with me and compelled me to share it on my Facebook page. It featured a man tiptoeing on a huge pile of ladders to look over a fence. All he needed to do was stand one of the ladders against the wall, climb it like a gentleman, and comfortably enjoy the view on the other side.
The image was so reminiscent of Nigeria, Nigerians, and our reality. It suited the scenario we found ourselves in this week with the drama playing out between Dangote Refinery and the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
The story seems simple. Aliko Dangote, a consummate businessman and mogul, who is as cunning in investing in businesses as he is in politicians—through handsome campaign donations—plunked $20 billion to build Africa’s largest refinery. It is (was) hoped that it will help Nigeria with its baffling and embarrassing energy crisis by refining crude oil locally. There was so much hope in the refinery that even before its completion, it was hastily commissioned a year ago by President Muhammadu Buhari on his way out of office.
For years, the government has counted on the refinery as a ‘game changer’, to borrow our popular political speak, because Nigeria’s four government-owned refineries have been moribund for decades. In these decades, billions of Naira have been spent trying to revive the refineries, and dozens of campaign promises have been made to get them working again, yet, like things possessed by diabolic forces, their fortunes have not changed.
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So there was and has been a lot riding on the success of the Dangote Refinery. Both the Nigerian government and its people have anticipated this with the hope that we would no longer suffer the humiliation of extracting crude oil from our incredibly rich soils and seas, as one of the largest oil-producing nations in the world, and then exporting it to be refined elsewhere before importing refined petroleum product. Naturally, this drives up the cost of fuel at the pumps. With the subsidy gone, it is the poor Nigerians who bear the brunt of the cost. When one considers the cost of living and prices of commodities, the ongoing hardship and the fall in the value of the naira, the picture paints a horror story.
Nigeria’s famed bureaucracy and underhand dealings have often frustrated businesses and business owners. But I don’t think we have seen anything on the scale of what is happening with the Dangote Refinery. While Nigeria is running from pillar to post seeking foreign investments in various sectors, and a Nigerian is able to invest $ 20 billion in a crucial, much-needed intervention in the oil sector, one would expect that the path would be cleared for this project. That the investor would have a garland placed on his head and flowers thrown at his feet. But this is not the case in Nigeria.
The frustration Aliko Dangote has been expressing in recent months over the operations of his refinery have been heard before from other investors who only need enabling policies from the government to operate businesses that will benefit the country and its citizens.
If reports are to be believed, efforts by the refinery to obtain local crude were frustrated, forcing him to obtain crude oil from abroad. Now to sell the refined products to local distributors is proving impossible as well because Nigerian regulatory agencies, particularly NMDPRA, constituted itself into a roadblock.
The NMPDRA boss, Faruk Ahmed, did not cover himself in glory when he very publicly claimed that the product coming out of Dangote’s refinery is substandard and accused Dangote of trying to institute a monopoly in the sector. This coming from government agencies that have been unable to get even one of four refineries working is absurd. Mr Ahmed should have known that to take on a powerful and shrewd businessman like Dangote would require more than just state power but facts and figures.
Since Dangote has continued to insist that his products meet the required quality and openly challenged the NMPDRA to prove otherwise, then there is reason to wonder what is happening. He went as far as openly conducting tests, supervised by members of Nigeria’s House of Representatives, that showed that the quality of his refined product is better than two imported samples.
Since this challenge has been made and Mr. Ahmed has not countered with evidence, it would seem there is more at play here. The members of the House of Representatives definitely think so as they have asked the president to suspend Mr Ahmed from office, not only for his unguarded statements against Dangote Refinery but also for licensing the importation of diesel with dangerously high sulphur content.
It is concerning that government agencies that should smoothen the path for private investors to help in infrastructure development, especially in crucial areas where the government has failed, for example, in running and maintaining a refinery, should constitute themselves into rackets that operate solely for the profit of the individuals occupying these offices.
How often have investors approached the country but have been frustrated by the officials making unreasonable personal demands to approve licenses for their operations? While I am not saying this is what happened in this instance, I think it is important that due investigations are conducted to verify precisely how we got here.
The consequence of this furore is the complete evisceration of the myth of the ease of doing business in Nigeria that government agencies and officials are keen to advertise when wooing potential investors. To be clear, Dangote did not set up a $20 billion investment for charity. It was for business, one that promised to save the government some shame and help Nigerians out from the consistent fuel scarcity the country has faced. But if the person is pushed to the point of being all but ready to walk away from that investment, if the government could buy him out, then we must reassess what we truly mean by the ease of doing business in Nigeria.
While this does not infer lowering standards to attract substandard services and infrastructure providers to Nigeria, because regulation is vital in all areas, regulatory agencies must themselves be regulated. Individuals and cartels must not be allowed to hijack state agencies to advance their personal interests or line their pockets to the detriment of the nation and its people.
Nigerians are being bled from the rise in the cost of petroleum products occasioned by the fuel subsidy removal, as well as the fuel scarcities we experience regularly. Attempts by investors to intervene and rescue the situation should not be truncated. There is a reason that Nigerian refineries have not worked in the last three decades. All efforts to revive them have failed because it serves the cartels best that they do not work. And unless the government breaks the back of the powerful oil cartel that has continued to profit from the refineries not working, these tears drawn from Dangote’s eyes will most likely not be the last that investors in Nigeria’s economy will have to give up.
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