Loss Of Dangote Refinery: Rivers, Communities Strive To Improve Ties With Investors

The world was at Lekki in Lagos State last Monday to witness the inauguration of the 650,000 barrels per day Dangote Refinery, the biggest petroleum refinery in the world.
It is estimated that the plant would boost the economy of Lagos State by generating thousands of jobs, downstream investments and taxes n Lagos. It would also attract multi-billion dollar foreign direct investments to Lagos and further enhance the economy in that corridor of the Gulf of Guinea.
The refinery, according to the Chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN) in Rivers State, Dr. Joseph Obele, will stabilise petroleum distribution with its multiplier benefits on businesses that depend on the products. “The era of consistent scarcity. The product will be available. There will be surplus of products in Nigeria and that issue of once in a while scarcity will be a thing of the past,” Obele told National Point.
While Lagos is celebrating the birthing of Dangote Refinery, stakeholders in the Niger Delta, which produces the crude oil in Nigeria are lamenting the loss of the multi-billion dollar investment to a non-oil producing corridor. This feeling is expressed against the backdrop that most of the crude oil that will be needed by Dangote Refinery will be pumped directly from the Niger Delta through a dedicated pipeline.
Mr. Ibifiri Bob-Manuel, the President of Rivers Entrepreneur and Investment Forum (REIF), blamed the state and local governments in the Niger Delta for failing to provide the required investment climate for Dangote to site the 650,000 BPSD refinery in the region. This he said also applied to relationships with other investors.
Bob-manuel said, “The Dangote refinery was to be situated in Rivers State and later they made a U-turn and went to Lagos, and we were very miffed by the whole approach.
“We wrote a couple of letters to the management of the Dangote group. We went as far as writing to the Federal Government.
“When they called for a meeting with us, we went for that meeting. It was discovered that the investment that was meant to be situated in Rivers State, precisely Okrika and Eleme Local Government Areas, they got preliminary land acquisition and agreement and perfected all that.
“But the amount of pushback and demands that were from the state government at that time, obviously, left them with no other option but to go and situate the business at a location where they were welcomed.”
The REIF President said state and local governments as well as communities should learn how to negotiate with investors in order to attract businesses to their areas.
“This brings us back to what we at the Investors’ Forum have always talked about. We’ve always felt the Rivers State Government, the local governments and the communities need to understand the language of businesses.
“You can only imagine the amount of impact the refinery is going to have on the IGR of Lagos State. Imagine if that investment was situated in Rivers State,” Bob-Manuel said.
The story of the location of Dangote Refinery began from the Niger Delta, where the founder of the company, Aliko Dangote, had proposed to build the modern plant after his purchase of the Federal Government-owned Port Harcourt Refining Company Limited (PHRCC) was revoked in 2007 by the government of President Umaru Musa Yar’Adua.
Dangote had in an interview admitted that the journey of the refinery located in Lekki started from Port Harcourt after his successful bid to take over the Port Harcourt refinery located in Eleme was revoked by the Federal Government in 2007.
“In business, you need to know before you jump into something. You have to do quite a lot of homework. For instance, Nigeria’s refineries were privatized in 2007. We bought two (Port Harcourt and Kaduna refineries), but after a few months, we had a new government that decided to void the transaction,” Dangote told the Nigerian Vanguard in an interview .
“So, since 2007, we’ve been working on building our refinery, but we didn’t finally start something until 2015. Here the capital investments are huge—much larger. And if you are not a big player, you have no way of survival,” he said.
Dangote’s company, Bluestar Oil Services Limited, a consortium that included Femi Otedola’s Zenon Petroleum, Transcorp Group and Sinopec of China, that bought PHRC plant at Alesa, Eleme for $561 million in the privatisation programme of the Federal Government the dying days of President Olusegun Obasanjo. Other bidders that lost out included Indorama International Finance Limited, Global Oil and Energy, Mittal Investments Limited, Link Global International Limited and Taleveras Group Oil Works Limited.
In a hurried transaction, the Obasanjo administration signed the papers and handed over the refinery to Bluestar on May 28, 2007, just a day before leaving office. The transaction and its details raised suspicions and became a top issue soon after Yar’Adua assumed office as President.
The sale of the refinery to Dangote was seriously opposed by the two major oil unions, the National Union of Petroleum and natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), which argued that not only was it an unfair disposal of a national asset, that the welfare of thousands of its members in the company would be jeopardized by the transfer of ownership to Dangote and partners.
However, the host communities in Eleme and Okrika Local Government areas were eager to enter into a memorandum of understanding with the new owners of the refinery and begun discussions moderated by the Bureau of Public Utilities with Bluestar when suddenly the Yar’Adua government gave in to pressures from NUPENG and PENGASSAN and revoked the privatization deal and refunded Bluestar the $561 million dollars already paid to the Federal Government. Today, the federal government has entered into a $1.5 billion loan arrangement to rehabilitate the refinery after it had remained idle for almost ten years.
After its purchase of the Port Harcourt Refinery was revoked, Dangote began to explore the possibility of erecting a Greenfield refinery within the Eleme/Onne industrial hub.
Prospects of land acquisition had begun and the landowners were eager to talk with the company. Somehow, the talks never took off. Dangote was no longer forthcoming. Feelers said the company was concerned about militant activities that were rampant then in the Niger Delta and had moved west to Edo State, around the Gelegele Basin. That move also failed and the companied continued its movement westward to the Ondo/Ogun coastal axis before it finally settled in the fast developing Lekki Free Trade Zone in Lagos State, where it has just commissioned the world’s largest refinery.
Mr. Olungwe Obele, an indigene of Eleme, said with the benefits that the communities have been receiving from Indorama, which bought over Eleme Petrochemicals Company Limited, the people are now eager to made things easy for prospective investors.
Indorama, which bought over EPCL in 2006, has been posting impressive profits and dividends for the host communities. The communities do not only receive dividends every quarter, the company also sponsors corporate social responsibility projects in the communities.
Rivers State Government, which owns 10 percent of the shares of Indorama is also receiving dividends from the company in billions every year as well as collecting income taxes from the operations of the company.
Very recently, when the company wanted to acquire more land to expand its operations, it was the Rivers State Government under Governor Nyesom Wike that that undertook to acquire the needed lands from the host communities under the Land Use Act to smoothen the process.
Also, when Indorama decided to construct an 11-kilometre road dedicated to transporting its products to the Onne ports for exports, the state government took over the construction of the road to avert a likely intractability in the negotiation between the company and the communities through which the road would pass.