Don’t look for a simple yes-or-no answer to the question posed in the headline. The best path is that it’s always tough to identify breakthrough opportunities in some business operations. These opportunities, to paraphrase the words of Peter Drucker(1909-2005), one of world’s acclaimed modern management consultants, that the best opportunities are “visible, but not seen”, and that companies become winners by spotting big opportunities and inventing best practices. But here’s the snag: Be ready to face visible and invisible obstacles. Secondly, don’t ignore externalities because the era when companies prospered by ignoring externalities had long gone. If you want to know, externalities is a term economists use when they talk about the side effects – or in the positive case, the spillover effects – of a business’s operations. They are the impacts that a business has on its broader milieu, directly or indirectly.
In the last couple of days, the $20 billion Dangote oil refinery and petrochemical industries, located in the rarefied Ibeju Lekki free-zone in Lagos, has been in the news. Out of the $20bn, the Nigerian National Petroleum Company Ltd has a minority stake of $2.76bn. Nonetheless, there have been allegations and counter allegations, all of which is not good news for the Nigerian economy and the much- sought after private investment in the country’s midstream and downstream subsector of the oil and gas industry. The last one week alone has witnessed a flurry of back and forth weighty allegations of sabotage by the management of Dangote Group oil refinery, and of ‘dirty fuel’ imports against some oil marketers, who in turn have accused Dangote refinery of selling toxic diesel, an allegation the company has since denied.
In its rebuttal to the allegation against the oil marketers, the Executive Director, Distribution system, Storage and Retailing Infrastructure, of the Midstream and Downstream Petroleum Regulatory Authority(NMDPRA), Mr Ogbugo Ukoha, denied the allegation that the agency issued import licenses indiscriminately to marketers despite Nigeria’s capacity to refine diesel locally. He insists that the deregulation of the downstream sector allows marketers to source products anywhere, whether locally refined or imported from outside the country. Here is the problem: When marketers are allowed to “source products from anywhere…”, doesn’t that lend credence to the fact that such unrestrained freedom to source products ‘anywhere’ could lead to the importation of ‘dirty fuel’ by some oil marketers?
And here comes, perhaps the weightiest allegation. The Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, has accused International Oil Companies(IOCs) in Nigeria of plans to frustrate the survival of the new Dangote Oil Refinery and Petrochemicals. Edwin, who spoke to journalists at a one-day training programme organised by the company in Lagos, June 21, said the IOCs were “deliberately and willfully frustrating” the refinery’s efforts to buy local crude from countries as far as the United States, with its attendant high costs. Didn’t we see that recently when some foreign airlines reportedly ‘ganged up’ against Air Peace, owned by local entrepreneur, Mr Allen Onyema when the airline announced the commencement of operations in the London route? Edwin also hit hard at NMDPRA, accusing it of granting licenses to all manner of marketers to import “dirty refined products into the country”. He claimed that the federal government issued 25 licences for the construction of refineries in the country, but only Dangote Group delivered on its promise. That’s the plain truth.
I am not surprised at all that the ambitious Dangote refinery will come to this clandestine, dishonest attempts to frustrate the refinery that was completed and commissioned last year by former President, Muhammadu Buhari. The commissioning was celebrated with pomp and circumstance. In this column, June 6, 2023, I did a detailed analysis of the multi billion dollar refinery. However, I expressed deep concerns that its success or failure will depend on a combination of continued strategic and operational efficiency and the support of the government in power. My fear was primarily anchored on the fact that politics has always ‘killed’ every good project in Nigeria. I hope my fear is not about to come to pass. It may be recalled that before now, Mr Edwin had raised the alarm that as far back as September, 2017, an investigation by an international organisation known as “Public Eye”, had revealed that polluted and toxic fuels were being exported on a large scale from the ports of Rotterdam and Amsterdam in Netherlands for exports to African markets.
The polluted and toxic fuels may have arrived Nigeria with its negative impacts on vehicles and equipment used in many manufacturing companies in the country. Here lies the externalities I had raised earlier. The classic examples are pollution in the air that the ‘offenders’ are not obliged to pay for or held accountable. As Harvard Business Review( April 2010 Edition on page 40) reported, the concept of externalities “goes beyond impacts on the physical environment. Those involved are in it to corners and make hefty profits at the expense of the public good. That’s why, according to the writers, “many types of externalities that used to be minor have grown too large to ignore”. That’s is also why the allegation of sabotage against the oil marketers by the Dangote Group should be thoroughly investigated. It should help the authorities to respond rationally rather than by mere denial as the NMDPRA tried to do. In today’s global rough and tumble business environment, searching for that proverbial ‘pot of gold’, requires extraordinary people with a unique gifting, vision and passion beyond their own personal advancement. That’s why, where successive governments have consistently failed the people, promised the moon but delivered doughnuts, entrepreneurs of breathtaking scope and uncommon business acumen have come to the rescue of Nigerians, boost performance and transform growth prospects. I have never met Aliko Dangote, Africa’s richest man, and Founder and Chairman of Dangote Group before, but his life story provides that out-of-box thinking, that uncommon niche that good strategies often make good spreadsheets and ultimately, superb business success. Truth is, for leadership in every area of life to have a meaning, it must be earned. In reality, modern economy creates and spreads unprecedented challenges as well as opportunities and prosperity. But, it must be drawn from the fountain of entrepreneurship and sound management resourcefulness.
The current challenges of the Dangote oil refinery and petrochemicals, is reminiscent of the rags to riches stories of the man’s many businesses. They all began in small bits and pieces before they became a box office success. Look at it: At the young age of 21 in 1977, Dangote felt it was the right time to be his ‘own man’ and start his own business. That’s being folksy and futuristic, isn’t it? He was reported to have approached his millionaire uncle, Alhaji Sanusi Abdulkadir Dantata, for a loan. The old man of blessed memory generously granted his request with half a million naira(about $336 in today’s official exchange rate). It was like the biblical story of the ten talents. Dangote didn’t waste it, neither did he spend the wad of cash in a ‘riotous’ living nor become a playboy like many young men would have done. He invested it wisely. That’s how he became an importer.
That seed capital from the Big uncle has since multiplied into billions of dollars, greater national and international influence. The rest, as it’s said, is now history. It’s an inspiring story for anyone still searching for a business philosophy on how to make it, the legitimate way. That’s what they call the Midas touch. That’s how his businesses have traversed the African continent, Asia and Europe, covering key sectors such as agriculture, cement manufacturing, foods, agro-processing, sugar production, and now, oil refinery and petrochemicals. All of this is not to say that some of Dangote’s businesses have not failed or suffered setbacks. For example, in 2014, according to Forbes, Dangote lost a hefty $6bn due to naira depreciation. According to Bloomberg billionaires Index, Dangote also lost $3.12bn in 2023 and has lost over $3.6bn so far this year amid naira devaluation. But he’s still standing strong.
That’s the trademark of a savvy, resilient businessman, always working for a higher purpose. But, don’t rule out any sabotage in the ‘little fire’ outbreak that happened at the refinery last week, even though the management says ‘there’s no cause for alarm’, that the fire incident didn’t affect the operations of the company. Don’t also rule out ‘unseen hands’ at work to frustrate the growth of the refinery. With an installed capacity to process 650,000 barrels per day, this is about 30 percent higher than Nigeria’s current estimated 450,000 bpd consumption. Before now, Nigeria could only send about 547.4 million barrels into the international market annually. When fully on stream, the 650,000 bpd will place Dangote refinery as the largest single-train petroleum refiner in Africa and Europe, and a major game changer in Nigeria’s downstream market in Africa.
Also, the refinery is expected to supply crude to 53 African countries that hitherto depend on other countries for supplies of petroleum products. This is in addition to over 100,000 direct and indirect jobs the management of the refinery has promised to deliver. This is what the successive governments in the country have not been able to provide for the citizens. Considering this, it may not be out of place, as the company’s Vice President has alleged, that IOCs and others, may be working underground to frustrate the survival of the refinery. This could be similar to what the irascible, now embattled former Governor of Kogi state, Yahaya Bello did at Obajana Cement factory, owned by Aliko Dangote. The factory was early last year shutdown for some days as a result of the activities of some hoodlums reportedly sent by Bello. It caused the factory huge financial loss. But Dangote has since recovered from that and moved on. The same may not be different from the current challenges being faced by the new refinery. That’s perhaps why his stars keep shining despite the storms.
