5 Controversies Surrounding the Dangote Refinery

The Dangote Refinery, heralded as Africa’s largest and the world’s most substantial single-train facility, represents a $20 billion investment poised to transform Nigeria’s energy landscape. 

Spearheaded by billionaire Alhaji Aliko Dangote, the refinery boasts a substantial storage capacity of 4.5 billion liters, enough to meet Nigeria’s crude needs for 20 days and store petrol for 15 days. It is set to produce 53 million liters of petrol and 1.1 million tonnes of products daily. 

Aiming to become a leading foreign exchange supplier, the refinery targets $30 billion in revenues by 2025. Given these ambitious plans, government authorities are expected to actively support this significant national investment. Here are some major controversies surrounding the refinery.

Licensing and operational delays

The Nigerian National Petroleum Corporation Limited (NNPCL) has raised concerns about the Dangote Refinery still being in the pre-commissioning stage and not yet being licensed for full operation. This has led to skepticism about the refinery’s ability to fulfill its anticipated role in alleviating Nigeria’s fuel crisis.

Allegations of High Sulfur Content in Dangote Diesel

• Claims against Dangote refinery: There have been online reports and allegations suggesting that the diesel produced by the Dangote Refinery contains excessively high sulfur levels, reaching up to 1,200 ppm in some batches. These claims have raised concerns about the quality and environmental compliance of Dangote’s diesel products.
• Refinery’s defense: Dangote and its officials have vehemently denied these allegations, labeling them as false and part of a deliberate attempt to sabotage the refinery. They presented their own laboratory test results, showing that their diesel has a much lower sulfur content (e.g., 87.6 ppm) compared to imported diesel samples, which reportedly exceed 1,800 ppm. Additionally, they have accused the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) of manipulating data and issuing fake quality certificates to undermine their products.

The regulatory bodies and discrepancies in crude oil supply

• Initial allegations: Dangote Refinery management accused the Nigerian National Petroleum Corporation Limited (NNPCL) of supplying only 33% of the crude oil required for the refinery’s operations, suggesting deliberate sabotage.
• Revelation and backlash: During a Senate Ad-hoc Committee session, Aliyu Suleiman, Chief Strategy Officer of Dangote Refinery, admitted that NNPCL had actually been supplying 60% of the needed crude oil, contrary to previous claims. This admission has fueled accusations of blackmail and deceptive practices by the refinery’s management.

Additionally, there have been public disputes over product pricing announcements by NNPCL. Dangote Refinery rejected NNPCL’s press release on petrol prices, labeling it misleading and insisting that their pricing remains dollar-denominated, which has further strained relations between the refinery and regulatory authorities.

The International Oil Companies (IOCs), sourcing crude oil locally 

• Dangote’s claim: Alhaji Aliko Dangote publicly criticized International Oil Companies (IOCs) operating in Nigeria for obstructing his efforts to source crude oil locally. Devakumar Edwin, Vice President of Dangote Industries Limited, asserted that local fuel marketers are deliberately boycotting Dangote Refinery’s products. He claimed that only about 3% of the refinery’s output is being purchased locally, with the remaining 97% being exported.
• Market response: Contrarily, the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) and other independent marketers refuted this claim. DAPPMAN reported that 60% of the refinery’s products have been purchased locally, citing specific data and involvement from over 40 independent marketers. This discrepancy has led to accusations that Dangote Refinery is spreading misinformation to manipulate public perception and pressure the government.

This tension suggests that IOCs may be influencing the market to favor imported crude over domestically sourced oil, potentially forcing the refinery to rely on foreign crude supplies instead of supporting local production.

Lack of transparency in product pricing

• Pricing strategies: On the refinery’s public premiere day, there was significant confusion and controversy over the pricing of petrol. The Nigerian National Petroleum Corporation Limited (NNPCL) announced a price for Dangote’s petrol, which the refinery promptly rejected, labeling it as misleading. Dangote insisted that their pricing remained dollar-denominated and refused to sell in naira, creating uncertainty among stakeholders.
• Demand for clear pricing information: Fuel marketers and industry leaders have called for greater transparency regarding Dangote Refinery’s pricing to enable fair comparison with imported fuels. The absence of clear and consistent pricing information has led to distrust and frustration within the market, raising concerns about the refinery’s commitment to equitable business