Emmanuel OchayiThe $20 billion refinery project in Nigeria, the brainchild of Africa’s richest man, Aliko Dangote, is having payment problems, which is delaying the discharge of crude oil shipment from Chinese state energy giant PetroChina.
Since March 28, two million barrels of West Texas Intermediate crude oil have been adrift off the coast of Nigeria while payment confirmation is still pending.
Sources claim that the refinery has not yet given PetroChina a letter of credit and that the difficulties have been exacerbated by the Nigerian government’s inability to get dollars as a result of the naira’s decline versus the US dollar.
Dangote wants to reduce Nigeria’s dependency on petroleum imports, but progress is being hampered by the refinery’s inability to obtain dollars and issue letters of credit.
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“We are not delayed. If someone’s business is delayed, he is not giving us a good deal,” said Edwin Devakumar, Dangote Group Executive, emphasizing the importance of favorable sale prices and credit terms.
Potential sellers view the refinery’s payment terms as difficult, nevertheless, as they include a 60–90-day credit period or the requirement to exchange processed goods for crude oil.
The Dangote refinery began operations in January and has already reached half of its capacity. However, there are still delays because significant amounts of crude oil require working capital worth billions of dollars.
The refinery, which imports about ten cargoes of crude oil each month, continues to be a major participant in the West African fuel market despite these difficulties.
In a similar event, Nigeria’s oil regulator made it clear that the modifications made to diesel fuel sulphur content criteria are not a loosening of rules for nearby refineries, but rather a component of a regional harmonisation initiative.
The transition to cleaner fuels guarantees equitable opportunities for local refiners and is in line with worldwide environmental initiatives.
