Dangote warns that Nigeria's three state-owned refineries may never work again despite huge spend

AFRICA'S richest man Alhaji Aliko Dangote has warned that Nigeria's three state-owned refineries may never function properly again despite the federal government spending $2bn to rehabilitate them of late.

Built in the 1970s, the Nigerian National Petroleum Company (NNPC) owns three refineries in Kaduna, Warri and Port Harcourt but for the last 20 years or so, none of them have worked. Last year, the federal government decided to rehabilitate the refineries, so they could augment Alhaji Dangote's Lekki facility and it is believed that the state has spent $2bn lately, bringing the total spend on the three refineries to $18bn since their inception.

Alhaji Dangote, the chairman of the Dangote Group, whose 650,000 barrels-a-day refinery is the largest in Africa, has warned that the three state-owned facilities may never get back to full capacity again. Speaking while hosting members of Global CEO Africa, Alhaji Dangote said he had always feared this, which is why he wanted to buy the refineries from the government but when former President Umaru Yar'Adua refused to sell them to him, he decided to build his own.

According to Alhaji Dangote, he and other investors had acquired the three refineries in January 2007 but were compelled to return them to government ownership after a change in administration. He observed that despite significant subsequent investment, the refineries have remained inoperative.

Alhaji Dangote said: “The refineries we bought before, which were owned by Nigeria, were producing about 22% of our petrol. We bought them in January 2007 but had to return them due to a change in government as the NNPC managing director at that time convinced President Yar’Adua that the refineries would work.

“As of today, they have spent about $18bn on those refineries and they are still not working. I doubt very much if they will ever work.”

He likened the rehabilitation efforts to attempting to upgrade a 40-year-old car with modern technology, suggesting that even a new engine would not be compatible with the outdated framework. Towards the tail end of his administration, President Obasanjo sold the refineries to the Dangote group but his successor President Yar'Adua, reversed the deal.

Former President Olusegun Obasanjo had earlier expressed similar misgivings, asserting that the NNPC knew it was incapable of effectively operating the refineries but actively blocked private sector involvement. President Obasanjo revealed that Alhaji Dangote and other investors had paid $750m to acquire the refineries, only for the deal to be reversed by the Yar’Adua administration.

He added: “I told Yar’Adua the refineries would not work. I said the NNPC cannot do it but he said the NNPC said they can. I told him that when you want to sell them again, you won’t find anyone willing to pay even $200m as scrap and that is where we are today.”

According to President Obasanjo, the failure to privatise the refineries was fuelled by entrenched corruption within the NNPC and he insisted that those responsible should be held accountable. H further claimed that over $2bn had been spent on the refineries in recent years, with no tangible results.

President Obasanjo added: “If anyone says the refineries are working, why are they now relying on Aliko Dangote? He will make his refinery work and deliver.”