Petrol production at Nigerian business tycoon Aliko Dangote’s $20bn (£15.5bn) state-of-the-art oil refinery ought to be some of the best business news Nigeria has had in years.
But many Nigerians will judge its success on two key questions – firstly: “Will I get cheaper petrol?”
Sorry, but probably no – unless the international price of crude drops.
And secondly: “Will I still have to spend hours watching my hair turn grey in a hypertension-inducing fuel queue?”
Hopefully those days are gone but it might partly depend on the behaviour of what Mr Dangote calls “the oil mafia”.
For much of the time since oil was first discovered in Nigeria in 1956, the downstream sector, which includes the stage when crude is refined into petrol and other products, has been a cesspit of shady deals with successive governments heavily involved.
It has always been impossible to follow the money, but you know there is something dreadfully wrong when the headline “Nigeria’s state-owned oil firm fails to pay $16bn in oil revenues”, pops up on your news feed, as it did in 2016.
It is only in the last five years that the state-owned Nigerian National Petroleum Company (NNPC) has been publishing accounts.
The Africa head at the Eurasia Group think-tank, Amaka Anku, hails the Dangote refinery, in which the NNPC has a 7% stake, as “a very significant moment” for the West African state.
“What you had in the downstream sector was an inefficient, corrupt monopoly,” she says.
“What the local refinery allows you to do is have a truly competitive downstream sector with multiple players who will be more efficient, profit making and they’ll pay taxes.”
To put it bluntly, the population of this oil-rich nation has been conned on a colossal scale for many years.
Oil revenue accounts for nearly 90% of Nigeria’s export earnings but a relatively small number of business people and politicians have gorged themselves on the oil wealth.
Aspects of the business model have been baffling, including that of Nigeria’s four previously existing oil refineries.
Built in the 1960s, 70s and 80s, they have fallen into disrepair.
Last year Nigeria’s parliament reported that over the previous decade the state had spent a staggering $25bn trying and failing to fix the moribund facilities.
So Africa’s largest oil producer has been exporting its crude which is then refined abroad, much to the delight of some well-connected traders.
It would be like a bakery with a broken oven. But rather than fix it, the owner sends balls of dough to another firm that shoves them in a working oven and sells the loaves back to the baker.
Source:
www.bbc.com
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