Billionaire businessman Aliko Dangote has called on the Nigerian government to cease the practice of mortgaging crude oil, a strategy that has been used to secure loans for the country’s development.
Dangote believes this practice is hindering the availability of feedstock for local refineries and hindering the country’s potential for self-sufficiency in petroleum products.
Speaking at a summit organized by the Crude Oil Refinery Owners Association of Nigeria (CORAN), Dangote criticized the government’s reliance on crude oil exports for revenue, arguing that it is a short-sighted approach that deprives the nation of its long-term economic benefits.
He pointed to countries like Norway, which have invested their oil wealth into national wealth funds for future generations, as a model to emulate.
“To ensure sufficient feedstock availability, we will need to stop mortgaging crude, it is unfortunate that while countries like Norway are putting oil proceeds into a future fund through their national wealth funds, in Africa, we are spending oil proceeds from the future today.” He added.
Recent reports have revealed that the Nigerian National Petroleum Company Limited (NNPC) has pledged 272,500 barrels per day of crude oil through a series of crude-for-loan deals totaling $8.86 billion.
This amounts to approximately 8.17 million barrels of crude being used for different loan deals by the national oil firm on a monthly basis.
Dangote emphasised the need for Nigeria to prioritise the implementation of the domestic crude supply obligation and expand crude production capacity to support the growing demand from refineries.
He also highlighted the importance of incentivizing investors in the refining sector to attract more investment and boost the country’s refining capacity.
The Dangote Group has already made significant strides in refining capacity, with the 650,000 barrels per day Dangote refinery in Lagos being built without any government incentives.
The company’s success in this venture demonstrates the potential for Nigeria to become a regional refining hub.
However, Dangote warned that Nigeria faces increasing competition from other countries, including Kuwait, China, and Bahrain, which are also expanding their refining capacities.
Additionally, the tightening of environmental standards in Europe and the ban on exports of low-quality petroleum products from certain countries pose challenges for Nigeria’s refining industry.
To capitalise on these opportunities, Dangote urged the government to provide strong support and facilitate cooperation between stakeholders to build an additional 1.5 million barrels per day of refining capacity. This would not only reduce Nigeria’s dependence on imported petroleum products but also create jobs and stimulate economic growth.
Moving on, reports have shown that the decision to stop mortgaging crude oil and focus on developing local refining capacity can be a crucial step towards ensuring Nigeria’s energy security and economic prosperity.
By harnessing its abundant oil resources and investing in domestic refining capabilities, Nigeria can position itself as a major player in the global energy market and reap the benefits of a more sustainable and self-reliant economy.
By Ibe Wada
