25.3 C
Monday, May 16, 2022

NNPC moves to secure 20% stake in Dangote Refinery, others: Will Nigeria Learn its Lesson?

For more than four decades, Nigeria ran its state refineries into the ground, putting the country in the unusual position of being one of the world’s biggest oil exporters and a major gasoline importer.

Now that private investors, most significantly Aliko Dangote — Africa’s richest man — are rushing to open their own plants, the state has stepped in again.

The Nigerian National Petroleum Corporation (NNPC) wants stakes in at least six planned refineries, including Dangote’s monster 650,000 barrels per day plant. There’s no explanation of how the cash-strapped state firm will pay.

The NNPC says its vision is to boost the domestic refining capacity and to become a net exporter of petroleum products.

Nigeria’s partly private fuel-import system had long been riddled with patronage and corruption. Fuel was imported only to be smuggled to neighboring states, and labour unions and civic groups accused the government of making billions of dollars of illegal payments for fuel subsidies. Idled government refineries served that system well.

“The state’s record at managing its own refineries speaks for itself — none of them have worked in years,” said Antony Goldman, founder of Promedia Consulting, a political risk advisory firm. “This is just how a small, but influential network of traders likes it.”

READ ALSO: BPE hands over C of O of Ikorodu Bricks and Clay Limited to core investors

While the NNPC may not be looking to control the plants, its influence would still be outsized.

It’s likely to be relied upon for crude, and the government is responsible for permits and rules that need to be adhered to for a private business to succeed.

Since stakes weren’t in the draft reform bill sent by the presidency to the National Assembly, the NNPC’s proposal may not come to pass.

Still, the move raises the whiff of interference from entrenched “lobbies seeking to dilute the reform process,” Goldman says.

While the NNPC says it wants to turn Nigeria into a fuel-products exporter, it hasn’t demonstrated the capability to do so. The government may be best advised leaving it to others. (Bloomberg)

Latest news
- Advertisement -spot_img
Related news