No patriotic Nigerian should be delighted at the grave challenges facing the 650,000 barrels per day Dangote Refinery in Lagos. The challenges make efficient operations very difficult. Though Nigeria is a major oil exporter, the refinery inaugurated early last year is now compelled to import crude from Brazil. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has accused it of producing substandard automotive gas oil (AGO), and, worse, of having no licence for operation.
Frustrated at the turn of events, Aliko Dangote, founder and chairman of the $19 billion industrial complex in Lekki comprising a refinery, a petrochemical company and a fertilizer plant, has been reported to ask the Nigerian National Petroleum Company Limited (NNPCL) to purchase the refinery so as to end the widely held belief that he wants a monopoly of the petroleum downstream market in Nigeria.
Dangote need not give up on the refinery. He should rather learn from Bart Nnaji, the erstwhile Minister of Power who waited for 20 years till February 26, 2024, to unveil the 188 megawatt Aba Independent Power Project, Abia State. If Nnaji could wait for two decades because of the obstacles by highly placed Federal Government officials between 2012 and 2015 to get the project on stream, Dangote, who has so far lost only one year, should brace up for more challenges.
Both the Aba Independent Power Project and the Dangote Refinery are what Jim Collins and Jerry I. Porras, two American globally renowned organizational leadership scholars, would describe as having big hairy audacious goals (BHAGs). A business with a BHAG is designed to make a dent in history, to paraphrase Steve Jobs, the late Apple co-founder and chairman. Considered unrealistic, if not an outrageous thought, at the beginning by most people, such a business frequently solves a problem in a significant and innovative way to the applause and admiration of the same initial sceptics. This is what Jack Welch and his team at General Electric came to call in the 1990s stretch, a term that has since become famous in both the business literature and management schools worldwide.
By the time Nnaji started the Aba project, there was no private sector involvement in the electric power sector in the country. Power was on the exclusive list. Not even state governments were permitted by the extant law to get involved in electricity generation, transmission, or distribution. It was not until 2005 that the President Olusegun Obasanjo administration enacted the Electric Power Sector Reform Act that ended Federal Government’s monopoly. Still, Nnaji accepted the challenge from then-World Bank President James Wolfonsohn and then-Nigeria’s Minister of Finance Ngozi Okonjo-Iweala to build a gas-fired power plant in Aba to provide electricity to industries in the commercial city who were in desperate need of constant and quality power supply. The main challenge was not raising the funds from local and international sources or the bricks and mortars of building a power plant but upending the status quo in the power sector. The first mover disadvantage can be paralyzing.
The Dangote Refinery is a BHAG in its own right. By the time it was initiated, the biggest refinery in Nigeria was the 150,000BPD New Port Harcourt Refinery, followed by the 125,000BPD Warri Refinery, and then the Kaduna 110BPD Refinery. The Old Port Harcourt Refinery, built in the 1960s, could process only 60,000 barrels per day. All are Federal Government owned, and have for decades been in a mess due to official incompetence and corruption. Nigerians keen on setting up refineries have always gone for modular ones, that is, small or mid-size refineries to produce a few petroleum products like petrol, aviation fuel, AGO, and low pour fuel oil, in contrast to the standard refineries owned by the Federal Government that can produce a wide range of products and on a large scale. So, for Dangote to opt for a 650,000BPD refinery is truly audacious. It is a quintessential BHAG.
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The refinery is creating employment for thousands of Nigerian workers, suppliers, distributors, consultants and even street food vendors, in addition to generating money for the Federal Government and the Lagos State Government as well through tax revenue. Lands and properties around the location have been appreciating significantly in value. Therefore, it is in the public interest that the Dangote Refinery survives. The idea of selling it to the NNPCL should be perished immediately because there is no assurance that it won’t go the way of the state-owned refineries.
If Nnaji could endure all manner of things and still triumph, Dangote should be inspired by his example. In fact, all BHAGs face severe challenges. In their famous book, Built to Last, Collins and Porras recall how the building of the wide-body 747 plane forced Boeing to downsize its workforce by 60%, among other challenges. Yet, it persevered, and Boeing 747 aircraft became a game changer in global aviation in every sense. There are many other examples of grave challenges which were overcome by different businesses cited in the book.
In Nigeria, challenges in the path of BHAGs can be both ridiculous and personal, hurting the public good. At the combined 7th and 8th graduation of Alex Ekwueme Federal University in Abakaliki, Ebonyi State, last June, Nnaji told the stunned audience how in an attempt to get at him the government abandoned the 760KV Supergrid network the government approved when he was the power minister. The project was meant to provide energy security, apart from creating another transmission network for a nation of 200m and radically boosting power availability throughout our large nation. The country is today still stuck with the sole transmission network which is old, poorly maintained, fragile, and collapses once it is loaded with up to 5,000MW, resulting in nationwide blackouts.
Once Nnaji left office, the government announced the cancellation of the management contract between the Transmission Company of Nigeria (TCN) and Manitoba Hydro Power of Canada on suspicion that Nnaji owned this firm that was set up by the Canadian province of Manitoba in 1961 when he was only five years old. A person was dispatched to Manitoba to provide documentary evidence to nail him! The Presidential Task Force on Power, of which Nnaji was the founding chairman, was abolished no sooner than he resigned without an alternative provided. The Roadmap for Power Sector Reform, a document for the development of the electricity sector for the next 10 years that would see Nigeria produce 20,000MW from 5,000MW, was dumped shortly after he left office without an alternative provided. The nation is worse for it today. You can now imagine the frustration he was subjected to at the Aba power project. Still, he survived all this. Dangote has to learn resilience from the former power minister.
Despite his denial that he is a monopoly freak, the BUA Group, with which the Dangote Group has been in a fierce business fight, has in the last few days been asking Aliko Dangote to become more tolerant. A few years ago when I was carrying out a research on the cross-cultural challenges facing Nigerian internationalizing firms and wanted to use the United Bank for Africa and Dangote Cement as a case study, I was surprised to learn that I had been blacklisted by the Dangote consortium for pointing out in 2013 the incorrectness of the claim by Dangote Cement agents that the major cause of building collapses in Nigeria was the cement brands used. Yet, when a senior professor at Howard University, the most respected historically Black university in the United States, inquired from me in 2019 if Aliko Dangote was deserving of an honorary doctorate from the institution, I not only supported it but provided a vital contact to the businessman.
The Dangote Refinery needs support this time.
*Adinuba, Anambra State Commissioner for Information & Public Enlightenment (2018-2022), is a management researcher in Lagos
