Reasons Ogun State Lost $18.5 billion Dangote Refinery To Lagos State
Reasons Ogun State Lost $18.5 billion Dangote Refinery To Lagos State. Photo Credit: Premium Times

Reasons Ogun State Lost $18.5 billion Dangote Refinery To Lagos State

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The governor of Ogun State, Dapo Abiodun, and his predecessor, Ibikunle Amosun, are at each other’s jugular over the loss of Dangote Refinery to Lagos State.

Prime Business Africa understands that Aliko Dangote, Africa’s richest man and the owner of Dangote Refinery, had initially preferred to build the refinery in Ogun State. 

Dangote Refinery, which is the largest single-train refinery in the world, would have been built in Olokola Free Trade Zone in Ogun Waterside Local Government Area, Ogun State.

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However, talks broke down between Dangote and the then governor, Amosun, forcing the billionaire to shift focus to the neighbouring state, Lagos State’s Lekki Free Trade Zone. 

Reason Ogun State lost Dangote Refinery to Lagos State

Following the launch of Dangote Refinery on Monday, the Ogun State government came under criticism for losing the $18.5 billion investment to Lagos State. 

In a bid to defend its administration, Abiodun blamed Amosun, stating that the former governor frustrated the agreement with Dangote reportedly due to a personal axe to grind with the investor. 

At the time of the negotiation, Abiodun was the Chairman of the Olokola Free Trade Zone. He said Amosun frustrated his effort and that of the committee he headed regarding the Dangote Refinery. 

Defending Abiodun in a statement on Tuesday, the governor’s Chief Press Secretary, Kunle Somorin, said: “The then governor, perhaps, having a personal axe to grind with the promoter of the refinery project, Alhaji Aliko Dangote, frustrated all the efforts of Governor Abiodun and his committee. 

“The immediate Chairman, Board of Directors of the Nigeria Deposit Insurance Corporation, Mrs Ronke Sokefun, who was then a commissioner, served as the secretary of the committee, which engaged Dangote on the mega project. 

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“Instead of showing enthusiasm towards hosting the project in the state, the former governor brazenly opposed and obstructed efforts of the Abiodun-led committee in ensuring that the OKFTZ came into fruition.” 

Responding through his media team, Amosun, explained that Olokola Free Trade Zone doesn’t belong to Ogun State alone, and he didn’t frustrate the negotiation. 

Amosun said the reason he didn’t give in to the setup of the Olokola Free Trade Zone is because he was protecting the right of Ogun State. 

He revealed that in the ownership structure for the joint venture, Olokola Free Trade Zone, the Federal Government owned 51 per cent, the Ondo State government accounted for 14.5 per cent, the Ogun State government was given 14.5 per cent, while strategic core investors got 20 per cent. 

However, he said Dangote went ahead to acquire the 20 per cent to himself, making Ogun State a minority stakeholder, which means in the scheme of things, Ogun State doesn’t have significant authority compared to Dangote. 

Amosun also demanded that a total of 10,000 hectares of land in the zone be made available for the people of Ogun State, however, they couldn’t agree on the deal. 

“From its conception in 2007, it was a Joint Venture. The Federal Government of Nigeria owned the majority 51%, the Ondo State government (14.5%), the Ogun State government (14.5%), and strategic core investors (20%). 

“Alhaji Aliko Dangote, according to the information availed us when we took office, subsequently bought, and took over the 20% equity of the core investors. Ogun State was a minority equity stakeholder only, without proprietary strength and capacity to take sole decisions on the Joint Venture enterprise. 

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“Based on the advice of a committee the government set up to look into the matter, we engaged the majority equity holder, FGN, and our joint venture partner, Ondo State Government, who were very responsive and eager to have the project in Olokola Free Trade Zone. 

“We also vigorously engaged Alhaji Aliko Dangote and did everything possible to make the enterprise take off. A total of 10,000 hectares of land was made available. 

“With respect to all sides, it accords more with logic to appreciate the fact that Alhaji Aliko Dangote took business decisions of his own in accordance with the goals of his business strategy and risk assessment. 

“It is, therefore, interesting to read that the present Ogun State governor holds me responsible for allegedly scuttling the Olokola project. 

“For the benefit of the good people of Ogun State, Nigerians, and posterity, we challenge him, particularly as he was then the chairman appointed to oversee and ensure that the project was sited in Olokola Free Trade Zone, to disclose with facts, where he or the administration was remiss, and which might have led to the project being moved away from Ogun State,” Amosun said. 

Why Abiodun and Amosun are trading blames

  • Dangote Refinery is an $18.5 billion investment that will attract lead to the creation of 100,000 direct and indirect jobs in Lagos State. 
  • These jobs would have tackled unemployment in Ogun State, however, disagreement in ownership structure and land cost the indigenes work and financial opportunities. 
  •  Also, having Dangote Refinery situated in Ogun State would have attracted major investors or companies to Olokola Free Trade Zone. 
  • This would boost the internally generated revenue (IGR) of Ogun State, thereby, increasing available capital for the state government to finance infrastructure projects. Although the state’s IGR has been on the rise, up from N50.6 billion in 2020 to N100.7 billion in 2021 according to BudgIT. 
  • It would have also attracted or created more small and medium businesses to Ogun Waterside Local Government Area, leading to the development of the area, leading to a reduction in unemployment numbers in the state. 
  • Dangote Refinery will earn Nigeria about $21 billion per annum. 
  • Ogun State also lost the opportunity to become a crude oil refiner state, as Dangote Refinery plans to produce 650,000 barrels per day (bpd). 
  • Dangote Refinery can produce 53 million litres of Gasoline, per day; 34 million litres of Diesel per day; 10 million litres of Kerosene per day, and 2 million litres of Aviation Jet per day.
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