Connect with us

Business

DANGOTE REFINERY: IS NNPC INVESTING OR BAILING OUT THE UNBAILABLE?

Published

on

DANGOTE REFINERY: BAILING OUT THE UNBAILABLE
Investment or Bailout?

David Bako
It was hailed as the best thing to happen in the oil and gas sector especially in Nigeria – a serial importer of crude products.

The year was 2013 and in September of that year, Aliko Dangote, Africa’s richest man, announced yet another of his gargantuan projects – the construction of the biggest single train refinery in the world with production expected to begin in 2016.

Many delays and postponements later, the project has been bogged down by barely serviceable debts, poor planning, lack of centralized project management, mismanagement and has now become a huge albatross on Nigeria’s neck costing the country lots of FX and creating huge problems in return.

VALUATION

A project that started as a 9billion dollars project is now being valued at over 16billion dollars, albeit incorrectly. Sampling expert opinion from leading players in the oil & Gas industry, it is estimated that a refinery of that size should ideally cost within the range of 11 to 12billion dollars to build in Nigeria.

Notwithstanding the conflicting figures, it was recently announced that the Nigerian National Petroleum Corporation, NNPC, will be taking a 20% stake in the uncompleted, non-functional Dangote Refinery at the cost of 3.8billion dollars. Whilst this baffled many, NNPC’s actions effectively over-valued the yet to be completed refinery to 19billion dollars.

PROJECT DELAYS OR PROJECT DELAY-ED.

As at last count, the completion of the refinery had been moved eight times. Whilst some might say this is in character for Dangote Industries and their numerous projects across different sectors, the problem is deeper rooted.

A contractor at the delayed refinery project, speaking under the condition of anonymity said that poor planning, underpayment of contractors, and a lack of proper project management with over 40 contractors on site has led to most of the delays.

He also added that of the 40, none is willing to commission as there is no clear delegation of duty and over-decentralization leading to absolute chaos.

With these incessant delays, Banks are already calling in their loans. At the announcement of the project in 2013, Mr. Dangote said he had secured financing of 3.3billion dollars.

This debt burden has now risen to 7billion dollars with debt servicing of almost 700million dollars per annum.

Whilst Mr. Dangote has been able to restructure the facilities from various local and international banks twice so far, most banks have totally refused to restructure for the third time with principal repayment also falling due – as well as the annual interest payments.

Things have gotten so bad for the billionaire that even income from his other businesses are barely enough to cover the interest rates talk less of the principal.

This has led Mr. Dangote to seek innovative ways, including state capture, to prop up his business now that the refinery project has been consistently delayed and he has run out of money to repay.

Enter the NNPC Connection, Nigeria’s controversial PIB Amendment and the Crude Swap Saga.

THE NNPC CONNECTION – BAILING OUT THE UNBAILABLE

After taking FX at concessionary rates from the CBN, Nigeria is inexplicably tied at the apron strings to Mr. Dangote’s now-threatened refinery. Estimates by professional industry analysts and those close to the project put its completion date in 2024 or 2025.

Recently, the NNPC announced, under some obscure arrangement, that it was taking a 20% equity in the Dangote refinery at 3.8billion dollars. The NNPC was later to explain that it was giving only 1 billion in cash and the balance in crude.

Whilst this is a welcome development, Mr. Dangote will have a hard time doing anything tangible with the 1billion dollars cash which is barely enough to cover one years’ interest.

With some principal payments falling due and the banks’ unwillingness to restructure in the face of an estimated completion timeline of 2024 at the earliest, Messrs.

Dangote will need at least 3 to 4 billion to complete the project over the next few years even with this bailout. Both the way the refinery project has been carried out, and this subsequent NNPC bailout for Dangote refinery has turned Nigeria into a laughingstock on the global stage.

As for the controversial PIB bill currently before the Nigerian National Assembly, it is now clear to keen watchers that the reason the government wants to give a monopoly of importation for petroleum products into the country to Messrs.

Dangote is so he can make the excessive and extra profits he needs to manage his rising debt profile for the refinery (under the guise of ongoing refinery projects). Guess who will bear the brunt of the higher costs in petroleum products at a time when subsidies are being reduced? The Nigerian people.

With his refinery project costs way overboard, banks breathing down his neck and NNPC’s strange bailout seemingly meagre to take care of the principal and interest payments for his debts, is the Dangote Refinery a dead project even before it is completed, or will time be kind and permit the completion of this project to which Nigeria has mortgaged huge FX from its treasury to see it kick off in good time? The chicken has come home to roost, it may seem.

Finally, with the one billion dollars going towards the repayment of principal and interests which are falling due in August, the manipulations by NNPC and politicians at the National Assembly has now become clear for all to see…

As it stands, some government agencies and politicians are more than willing to mortgage the interests of the nation and masses to bail out the unbailable refinery project. Welcome to the Republic of Dangote!

David Bako writes from Abuja

Advertisement
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Business

Outcry In Abuja As FCTA Asks Business Owners To Pay For Using Generators

Published

on

By

Business owners within the Federal Capital Territory, Abuja have decried transfer by the Federal Capital Territory Administration, FCTA to impose levy on firms for utilizing turbines to energy their companies.

Some officers of AMAC believed to have been contracted by the FCTA, have been seen in some components of town distributing cost notices to a number of organizations together with DAILY POST.

In response to the discover signed by the Director Public Well being, HoD Atmosphere of AMAC, Ahmed Haruna, the Administration of Abuja Municipal Space Council Environmental Companies (ESD) Our bodies, mentioned industries, warehouses, Banks are to pay annual payment for utilizing generator because of the discharge of dangerous hazardous substance.

The discover reads, “Administration of Abuja Municipal Space Council Environmental Companies (ESD) Our bodies, needs to inform you of levy/charges resulting from Abuja Municipal Space Council for Gaseous Emission Allow Restrict. This consists of discharge of dangerous hazardous substance into the air or the land and the water in Nigeria by the actions of industries, warehouse, Financial institution, both from generator or heavy obligation, drilling, manufacturing, development and manufacturing equipments, filling station, ETC.

“That is according to the supply of part (2C) of the forth schedule to the Structure of the Federal Republic of Nigeria as amended below the perform of the Native Authorities Authority and Federal Environmental Safety Company Act (FEPA) Part 25 which established the Native Council Authority to, regulate, implement and assortment of levies for the curiosity of public well being significance (welfare) part 18, 20, 21, 26and 27 and different related legal guidelines Nationwide Environmental Well being Observe Regulation 2016 which confers on the council the ability to control, examine, management and assortment of levies.

It additionally threatened to punished and cripple organizations that violate the order.

“Additionally observe that failure to adjust to this forgoing regulation is punishable offence and we are going to seize the actions of the group and arrest as prescribe partially iV Part 27 Subsection 1 abcd and (2) of FEPA ACT 1992”.

However when DAILY POST engaged the officers distributing the notices on what the FCTA administration had put in place to safeguard lives in Abuja from it termed hazardous substance, they had been unable to clarify.

When contacted, an admin of the AMAC who recognized herself as Peace, mentioned this system was accredited by the Federal Authorities.

She mentioned, “is a levy accredited by the Federal Authorities that who ever is working enterprise in Abuja ought to pay. And it’s to be paid yearly”.

She, nonetheless, declined additional feedback when requested to present particulars of the cost.

In the meantime, many residents of the FCT are fearful that town’s administration might cripple companies attempting to outlive amid the present financial actuality with it’s quite a few taxes.

In per week, small companies in Abuja had acquired not less than 4 to five cost notices from AMAC. However residents have noticed that the administration has put nothing in place to justify the quite a few taxes imposed on companies and people.

They expressed concern that an administration amassing tax for emission from generator ought to have made entry to medical amenities simple, lamenting that medical payments in Abuja hospitals stay very excessive throughout all hospitals.

Additionally they argued {that a} authorities that might not generate sufficient energy for individuals to run their companies shouldn’t be taxing residents and enterprise house owners who wrestle each day to run their companies with an alternate energy supply.

A few of them cautioned the FCTA to cease stifling companies in Abuja with taxes when improvement stays stagnant. “How will you tax us for emission however can’t present an alternate vitality supply? That is draconia,” a enterprise proprietor informed DAILY POST in Utako.

A supervisor of a preferred firm in Apo, Abuja who most well-liked no to be talked about in print, informed DAILY that the event is conceivable. He described the discover as a transfer by the federal government ro cripple companies in Abuja.

He lamented why a authorities would provoke such a coverage amid the present hardship ravaging your entire nation.

“One query I’ve been asking is, why do enterprise house owners use turbines? Is it not as a result of the federal government failed to offer electrical energy for us? Then after failing to do your job, I selected to assist myself with generator to energy my agency with an enormous bills and also you are actually coming again to ask me to pay for that? That isn’t regular.

“That is only a means of extorting cash from poor residents. They’re speaking about well being, do they even care in regards to the healthcare system? What have they put in place concerning healthcare? What are they going to realize with the cash now concerning the well being points they’re claiming? Nothing.

“Companies are presently struggling. Some have even closed down because of the horrible impact of COVID-19 lockdown in 2020 and a authorities goes about extorting cash from enterprise as small as mine. That is an evil agenda.

When requested if his group is getting ready to pay the levy, he merely mentioned, “We don’t have cash for that, I’m sorry.”

Managing Director of a preferred trade in Abuja, Dr Obi Ugochukwu mentioned regardless of all taxes imposed on residents, there are not any seen tasks within the territory.

“There are comparatively no social facilities within the metropolis. We survive on our personal. Generally, I’m wondering what they’re really utilizing the cash for.

“If you happen to drive via most components of town, one can find out that even the road lights will not be working. The satellite tv for pc cities do no even have it in any respect. So the place is the cash channeled to?

“Now we have dangerous roads in Abuja right here. Go to locations like Bwari Space Council and see. How would companies transfer when individuals discover it troublesome to convey their merchandise and merchandise to the place they are often marketed?

“Sure, you’re taxing individuals on generator emission, however you have to have put issues in place first. What number of public well being amenities are you able to level to notably within the satellite tv for pc cities the place many of the enterprise house owners reside? Even within the metropolis centre, how reasonably priced are hospitals?

“No single factor is sponsored within the metropolis because of the taxes being collected by the administration. This can be a capital metropolis the place you can’t afford hospital invoice on your wards” he mentioned.

DAILY POST recollects that the FCT Minister of State, Dr Ramatu Aliyu, a couple of days in the past, disclosed that the FCT administration spent about N8 billion yearly on waste administration within the Federal Capital Metropolis (FCC) and the satellite tv for pc cities.

The Minister, in an announcement on Sunday claimed that the Abuja Environmental Safety Board (AEPB) spent a mean of N6 billion, whereas the Satellite tv for pc Cities Growth Division (STDD) expended N2 billion on waste administration yearly.

However a respondent who owns a enterprise in Wuse however resides in one of many satellite tv for pc cities, informed our correspondent that his neighborhood contributes cash month-to-month for waste administration.

He additionally said that no authorities in any a part of the world would tax residents with out giving them the advantage of these taxes.

“We pay a minimal of N3,000 month-to-month to those that come to choose waste from our neighborhood for recycling. They often include their autos and we pay them for the providers. That is one thing the federal government ought to have used to generate energy. The waste itself might be transformed to a different supply of vitality however would they suppose in that path?

“The federal government cannot deal with the principle metropolis and abandon the satellite tv for pc cities the place a few of these entrepreneurs reside. You deserted them within the satellite tv for pc city and once they come to town to do their companies, you cripple them with pointless taxation. How would they survive?

He described the event as an obnoxious coverage by the FCTA. He expressed shock that the administration is implementing such a coverage below the watch of the FCT Minister, Mohammed Musa Bello, a younger politician who remains to be aspiring for different management positions.

Continue Reading

Business

One Dollar Now Going For 523 Naira At Black Market

Published

on

By

The naira is currently exchanging at 523/$ at the black market. This is as a result of the decision of the Central Bank of Nigeria to stop the allocation of foreign exchange to Bureau de Change operators in the country.

After the Monetary Policy Committee meeting on Tuesday, the Governor, CBN, Godwin Emefiele, had accused the BDCs of abusing the privilege given to them and sabotaging efforts to ensure naira stability in the country.

He said, “The facts abound that BDCs have turned themselves into agents that facilitate graft and corrupt activities of people who seek illicit fund flow and money laundering in Nigeria and we will go after all of them.

“Throughout this meeting of the MPC, we extensively debated this matter, and independently with each member of the committee exhibited accurate and deep understanding of issue at stake.

“After these exhaustive and extensive deliberations, the management of the Central Bank with the support of the committee reached the following decisions which will take the following effect. Hence, the CBN will henceforth discontinue the sale of foreign exchange to BDC operators.”

As at Monday, one dollar went for 503, then it now fell to 505 on Tuesday, few hours after the CBN made the announcement. Then on Wednesday after trading, the dollar was bought at N515 and sold at N523 according to naijabdcs.com, the official website of the BDCs.

The CBN, however, maintained the official rate of N410.16/$1 on its website.

Before the new regulation, the CBN had been supplying each BDC $10,000 twice a week at the rate of N393.

Continue Reading

Business

Heritage Bank Hailed For Supporting Ibadan Golf Club

Published

on

By

Heritage Bank Plc has been commended for its continued supports to Nigeria’s sports’ sector, especially backing the Ibadan Golf Club’s 30th anniversary event.

The event that attracted dignitaries and stakeholders from various parastatals also had the presence of the Governor of Oyo State, Engr. Oluseyi Makinde and over 150 golfers who participated in the tournament during the weeklong celebration.

In a speech during the grand finale of the 30th anniversary of the club, the Captain of the Ibadan Golf Club, Oladiran Ibironke commended one of Nigeria’s most vibrant financial institutions, Heritage Bank and others for providing financial support to ensure the success of the event.

R-L: Akintayo Akinola – Divisional Head, South-West, Heritage Bank Plc; Mary Okunola, Lady Captain, IGC; Tunji Oladosu, 2nd Vice Captain, IGC; Engr. Makinde Oluseyi Makinde, Governor, Oyo State; and Oladiran Ibironke, Captain, Ibadan Golf Club; during the Ibadan Golf Club 30th anniversary lead sponsored by Heritage Bank, in Oyo State.

“Special thanks to Heritage Bank Plc., the anniversary’s major sponsor for enlarging our coast financially in order to make the anniversary elaborate and eventful. You will forever be remembered in the history of Ibadan Golf Club,” he stated.

Ibironke also praised the efforts of the founding fathers of the club while tracing the history of how the sporting club has continued to blossom.

He stated that tremendous transformations had occurred within the club since inception 30 years ago.

“We are celebrating 30 years today because some great minds came together and established what we are celebrating today.

“From the history that we heard, they started from Ibadan Recreation Club before moving over to where we are today in 1990,” Ibironke said.

Speaking on the 30th anniversary, the Ag. Group Head, Corporate Communications, Heritage Bank, Ozena Utulu noted that the Bank is delighted to be the lead sponsor and to be associated with Ibadan Golf Club, stating that the sponsorship is hinged on its brand’s passion to support sports, especially golf in promoting health, wellbeing, and nation building.

She stated that Heritage Bank, as the sponsor of Ibadan Golf Club’s 30th anniversary, is working assiduously towards achieving its vision of becoming a bank known for promoting healthy lifestyles and the general wellbeing of the society at large.

“Heritage Bank believes in development. We have the tenacity to develop and sport is a way of developing Nigerians both young and old. We want to encourage the golfers; I believe that this type of games is capable of helping them to keep healthy and fit,” Utulu stated.

Continue Reading

Trending

%d bloggers like this: