By Dele Sobowale
“The most obstinate illusions are ultimately broken by facts” – Trevor-Roper, 1914-2003
When Dangote
Refinery, two weeks ago, announced that it would no longer sell fuel to marketers in naira; and, the Nigerian National Petroleum Corporation Limited, NNPCL, simultaneously pronounced the end of naira-for-crude arrangement, it was clear to some of us that the illusions with which Nigerians have been living since 2023, had been broken by the facts which had always been at our disposal; but which we chose to ignore. Alhaji Dangote, before establishing his gigantic refinery, must have consulted with the topmost leaders of the Buhari administration and the NNPCL; who promised him that he would have all the crude oil to run his refinery – whose capacity is 650,000 barrels per day.
President Buhari, who doubled as the Minister of Petroleum Resources must have been one of them. Indeed, when in May 2023, Buhari commissioned the Dangote Refinery, which was far from being ready to produce fuel, Nigeria’s Head of State re-affirmed the readiness of the Federal Government to supply all the crude the Refinery would need. It was a colossal executive lie. Here is why.
In July last year, I published an article, partly reproduced below, to warn Dangote and Fellow Nigerians that Africa’s richest man and the rest of us have been deceived by the FG under Buhari; and that the Tinubu government could not possibly redeem the pledge made by his predecessor who was either absolutely ignorant or deliberately deceptive. Read the warning ignored by Nigerians.
Who promised Dangote 650,000 barrels of crude?
“The combination of these two has now seen us restoring production in our country, and we believe that, as the Minister has said, we will soon hit the target of 2 million barrels of oil production per day.
“Yes, this country, as we have said, will be a net exporter of petroleum products by the end of this year.” Mr Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, NNPCL, Abuja, July 16, 2024.
If you believe that, then you will believe anything from Kyari and the FG. Nigerians remember the promises made last year when fuel subsidy was hastily removed and the economy was thrown into a tail-spin from which it has not recovered. NNPCL promised to get the refineries pumping fuel by December.
While most of the readers can quickly see how Dangote and other refineries were handled by the NNPCL, which made deliberately false promises on production. First, Buhari’s government had mortgaged Nigeria’s future by taking undisclosed foreign loans using future crude delivery as collateral. Thus, even if Nigeria produces 2mbpd of crude, a significant quantity would not be available to supply Dangote and other domestic refineries. Furthermore, the Organisation of Petroleum Exporting Countries, OPEC, has imposed a limit of 1.7mbpd on the country – which cannot be disregarded without unpleasant consequences. Nigeria has achieved 2mbpd only once since 2013 and not once since Buhari mounted the saddle in 2015. In fact, the nation has averaged only about 1.4mbpd in the last ten years. Additionally, there was a previous commitment to supply the nation’s four refineries 445,000bpd. The combination of supplies to Dangote and NNPCL’s refineries would have left less than 500,000bpd for export – again with dire economic consequences for Nigeria. Second, the NNPCL, on behalf of the FG, took a $3 billion loan from the Afrexim Bank, last year, pledging future crude deliveries – again involving undisclosed quantities. Those deliveries are now being made. Meanwhile, January and February actual crude productions are less than 1.7mbpd on the average; and reports indicate that shiploads of March production remain unsold.
Consequently, March crude output might be lower than 1.6mbpd. Cumulatively, by the end of the first quarter of 2025, Nigeria would have generated a negative variance of one million bpd. With such wide disparity between budget by the FG, promise by the NNPCL and the reality we face, it is obvious why the declarations by officials can be characterised as a dinner table set up with bowls of illusions. It can now be stated authoritatively that Nigeria will not average 2mbpd; and might never attain that target in 2025.
Gathering dark clouds
“Dangote refinery, others may import $1.4bn crude monthly.” Report, March 25, 2025
The Group Managing Director, GMD, of the NNPCL is one of three Nigerians privileged to have access to all the data regarding Nigeria’s prior commitments to supply crude for loan repayment. The others are the Minister of Petroleum Resources and the President of Nigeria, as well as the Minister of State in the Ministry.
Like co-conspirators everywhere, they have all been singing the same song. They have assured Dangote and other domestic, as well as FG’s own refineries of crude supply; and most recently, with payment in naira thrown in. Read what Kyari said again in July last year; and you would discover how totally false the utterances have turned out to be.
Nigeria is as far from crude production of 2mbpd as it was in 2015; and we are not anywhere near being a net exporter of fuel (despite Dangote’s exports) than in 2000. Because every lie has an expiry date, the nation is now confronted with a situation in which Nigeria, once the largest exporter of crude must import crude and pay scarce dollars for it. We are stuck with a mess. Suddenly, we are confronted with several unpleasant truths. One, at least for the rest of this year, the FG/NNPCL cannot supply all domestic refineries with crude oil paid for in naira. Two, as corollary to the first fact, any investment in a Nigerian refinery, based on the assumption of adequate local supply of crude oil is already akin to a sand castle built on the beach by kids. It will not last. Three, gullible Fellow Nigerians, who were expecting a stable supply of fuel at “reasonable price”, are in for the shock of their lives. Nigerians will depend on imported fuel for years to come. Four, disbelieving Kyari, Mr Heineken Lokpobiri and the FG, when they issue assurances is the beginning of wisdom.
Five, Nigerians should accept that the promise of domestic sustainable fuel sufficiency will continue to elude us as long as we have serial dissemblers in charge of our petroleum sector.
Mr Heineken was still telling participants at an event in January this year that Nigeria would soon be pumping out 2mbpd of crude – even when daily production figures in January gave the lie to the announcement. Primary school arithmetic could have proved to all of them that 650,000 to Dangote and 445,000 barrels to NNPCL’s refineries are incompatible with Nigeria’s current fiscal and monetary programmes.
Elephant in the room – Rivers State crisis
“An ill-wind blows nobody nothing good.”
Bad politics will always drive out good economics anytime and anywhere. And, capital is a coward; it takes flight whenever violence and destruction are threatened. The crisis in Rivers State will trump our best plans if it erupts into more violence. How we handle it could determine the fate of Nigeria for decades to come – not this year alone.
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