Why Dangote Urges Nigeria Government to Stop Crude-for-Loan Agreements
Aliko Dangote, President of the Dangote Group, has called on the Nigerian government to cease its practice of mortgaging crude oil to secure loans, advocating for better availability of feedstock for local refineries.
Speaking at a summit hosted by the Crude Oil Refinery Owners Association of Nigeria in Lagos, Dangote lamented that while countries like Norway invest their oil revenues into future funds, Nigeria and many African nations are depleting their oil resources for immediate gains.
“To ensure that we have enough feedstock, we must stop this practice of mortgaging crude. It’s disheartening that while countries like Norway are saving oil proceeds for the future, we are spending ours today,” he remarked.
A recent report revealed that the Nigerian National Petroleum Company Limited had committed to a series of crude-for-loan deals amounting to $8.86 billion, pledging 272,500 barrels of crude oil daily. This arrangement could lead to approximately 8.17 million barrels being utilized monthly for various loan agreements.
At the summit, represented by Group Executive Director Mansur Ahmed, Dangote emphasized the importance of prioritizing domestic crude supply obligations and increasing crude production capacity to meet refinery demands.
He highlighted that the Dangote refinery, with a capacity of 650,000 barrels per day, was built without any government incentives. However, to transform Nigeria into a refining hub, he insisted that investors need proper incentives.
Dangote noted that 1.8 million barrels of new refining capacity are expected to emerge in Kuwait, China, and Bahrain within the next three years, while European countries tighten environmental regulations. He pointed out that several refineries in Europe and China, capable of processing 3.6 million barrels per day, are likely to close soon.
He stated, “For Africa, which imports about 3 million barrels per day of petroleum products, the opportunity lies in increasing our refining capacity. Many African countries produce more crude than they can refine, leading to significant imports.”
To seize this opportunity, Dangote asserted that building an additional 1.5 million barrels per day of refining capacity is essential. He underscored that achieving this goal would require strong governmental support and collaboration among stakeholders.
In a related development, the Federal Government has designated the Dangote refinery as the exclusive supplier of Jet A1 fuel for Nigerian airlines. Minister of Aviation Festus Keyamo announced this during an interview, stating that this decision, supported by airline operators, aims to shield them from fluctuations in global oil prices and reduce
operational costs.
