Markets

Dangote Speaks About Investing in Edo State

Published

7 years ago

November 17, 2017

Dangote Speaks About Investing in Edo State

CNBC Africa’s Onyi Sunday caught up with Africa’s richest man, Aliko Dangote, President of the Dangote Group, at the just concluded Edo Investment Summit in Benin City and discussed what this summit means for the State.

I think the summit went very well even though they had a short period of time inviting people and also arranging it’s a situation where they want to show that the public sector is ready to partner and do business with the private sector. You can see that the hall was filled to the brim and they invited a lot of people and majority of them really paid attention to the conference, and these are big investors. They are taking people who have $500 million and above and I think this will open up the state to job creation and it will enlighten people of the opportunities Edo State has. They are here ready to do business and I think the state has a lot of advantages in terms of agriculture and agro-allied industries which I think is their own oil. If they can really focus on that and harness it they will be able to do something great.

In your speech at the event, you spoke about the need for better collaboration between the public and private sectors. How important is this and what has been the situation been from your perspective?

The relationship has been okay to a certain extent. There are a couple of different people in government. Some are pro business and others are anti-business. The ones that are against business have never really taken a good look to see the opportunity for government, because there are taxes. People in business pay taxes. Even if they have a 3-5 year tax holiday, by the time that you start paying taxes, you end up seeing that the government makes more money than the owners of the business, including the reserves of the company. We have that case in our sugar business. The government takes more money, when you take the VAT and everything into account, the government takes 42 per cent and we take 48 per cent.

It is a win-win situation. Apart from that, you’ll create a lot of jobs because it isn’t the duty of the government to create jobs. The government is meant to facilitate and make sure there’s an enabling environment. We the private sector are the ones that will actually take the risks. We risk our money, risk our resources, borrow more money from the banks and now go on a trajectory. If it fails we’re on our own. If it succeeds, then government comes in and shares the profits. However, the main thing isn’t only about money or profit making. Of course you have to make money, but the most important thing for us today as a nation is how do we create jobs.

Based on my own estimations Nigeria should be creating something like about 5 million jobs every year for us to become prosperous. The only way we can create this high number of jobs is to go and concentrate on agriculture. In my speech I said, “how many barrels of oil do you need to make up for one tonne palm oil.” A tonne of palm oil can actually buy almost 8 barrels of oil and 8 barrels of oil is more difficult to get than palmoil because we have the land, we have the water, our climate is excellent, so that’s what going on.

What do you think of the calls for restructuring and how significant are investment summits like this one to states and their development?

When you look at things as they exist today, majority of the people who call for restructuring don’t understand what restructuring is all about. And majority of the states in Nigeria are not viable. You have to run government like a business. You cannot continue to just keep running government in deficit when most states are not able to pay salaries. We have an income of N3 billion and then you have salaries and other expenses without even projects. So it means that even if you ignore capital projects and take care of only recurrent, you will always be N1 billion short.

If you run this for 5-10 years, where in the hell are you going to get the money to pay off that debt which you are creating? To do well, states don’t need to wait for restructuring. A state like Edo should move on and concentrate on agriculture, bring prosperity to your people better than oil can. With oil you don’t get the revenue, but with agriculture, the prosperity starts from the state and then it spreads to the rest of the country. This is what I think they should do. Edo can mobilise and the governor is capable. He is one of the best governors that we have in Nigeria.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Dangote Mega Refinery in Nigeria Seeks Millions of Barrels of US Crude Amid Output Challenges

Published

2 days ago

May 16, 2024

Samed Olukoya

The Dangote Mega Refinery, situated near Lagos, Nigeria, is embarking on an ambitious plan to procure millions of barrels of US crude over the next year.

The refinery, established by Aliko Dangote, Africa’s wealthiest individual, has issued a term tender for the purchase of 2 million barrels a month of West Texas Intermediate Midland crude for a duration of 12 months, commencing in July.

This development revealed through a document obtained by Bloomberg, represents a shift in strategy for the refinery, which has opted for US oil imports due to constraints in the availability and reliability of Nigerian crude.

Elitsa Georgieva, Executive Director at Citac, an energy consultancy specializing in the African downstream sector, emphasized the allure of US crude for Dangote’s refinery.

Georgieva highlighted the challenges associated with sourcing Nigerian crude, including insufficient supply, unreliability, and sometimes unavailability.

In contrast, US WTI offers reliability, availability, and competitive pricing, making it an attractive option for Dangote.

Nigeria’s struggles to meet its OPEC+ quota and sustain its crude production capacity have been ongoing for at least a year.

Despite an estimated production capacity of 2.6 million barrels a day, the country only managed to pump about 1.45 million barrels a day of crude and liquids in April.

Factors contributing to this decline include crude theft, aging oil pipelines, low investment, and divestments by oil majors operating in Nigeria.

To address the challenge of local supply for the Dangote refinery, Nigeria’s upstream regulators have proposed new draft rules compelling oil producers to prioritize selling crude to domestic refineries.

This regulatory move aims to ensure sufficient local supply to support the operations of the 650,000 barrel-a-day Dangote refinery.

Operating at about half capacity presently, the Dangote refinery has capitalized on the opportunity to secure cheaper US oil imports to fulfill up to a third of its feedstock requirements.

Since the beginning of the year, the refinery has been receiving monthly shipments of about 2 million barrels of WTI Midland from the United States.

Crude Oil

Oil Prices Hold Steady as U.S. Demand Signals Strengthening

Published

2 days ago

May 16, 2024

Samed Olukoya

Oil prices maintained a steady stance in the global market as signals of strengthening demand in the United States provided support amidst ongoing geopolitical tensions.

Brent crude oil, against which Nigerian oil is priced, holds at $82.79 per barrel, a marginal increase of 4 cents or 0.05%.

Similarly, U.S. West Texas Intermediate (WTI) crude saw a slight uptick of 4 cents to $78.67 per barrel.

The stability in oil prices came in the wake of favorable data indicating a potential surge in demand from the U.S. market.

An analysis by MUFG analysts Ehsan Khoman and Soojin Kim pointed to a broader risk-on sentiment spurred by signs of receding inflationary pressures in the U.S., suggesting the possibility of a more accommodative monetary policy by the Federal Reserve.

This prospect could alleviate the strength of the dollar and render oil more affordable for holders of other currencies, consequently bolstering demand.

Despite a brief dip on Wednesday, when Brent crude touched an intra-day low of $81.05 per barrel, the commodity rebounded, indicating underlying market resilience.

This bounce-back was attributed to a notable decline in U.S. crude oil inventories, gasoline, and distillates.

The Energy Information Administration (EIA) reported a reduction of 2.5 million barrels in crude inventories to 457 million barrels for the week ending May 10, surpassing analysts’ consensus forecast of 543,000 barrels.

John Evans, an analyst at PVM, underscored the significance of increased refinery activity, which contributed to the decline in inventories and hinted at heightened demand.

This development sparked a turnaround in price dynamics, with earlier losses being nullified by a surge in buying activity that wiped out all declines.

Moreover, U.S. consumer price data for April revealed a less-than-expected increase, aligning with market expectations of a potential interest rate cut by the Federal Reserve in September.

The prospect of monetary easing further buoyed market sentiment, contributing to the stability of oil prices.

However, amidst these market dynamics, geopolitical tensions persisted in the Middle East, particularly between Israel and Palestinian factions. Israeli military operations in Gaza remained ongoing, with ceasefire negotiations reaching a stalemate mediated by Qatar and Egypt.

The situation underscored the potential for geopolitical flare-ups to impact oil market sentiment.

Crude Oil

Shell’s Bonga Field Hits Record High Production of 138,000 Barrels per Day in 2023

Published

2 days ago

May 16, 2024

Samed Olukoya

Shell Nigeria Exploration and Production Company Limited (SNEPCo) has achieved a significant milestone as its Bonga field, Nigeria’s first deep-water development, hit a record high production of 138,000 barrels per day in 2023.

This represents a substantial increase when compared to 101,000 barrels per day produced in the previous year.

The improvement in production is attributed to various factors, including the drilling of new wells, reservoir optimization, enhanced facility management, and overall asset management strategies.

Elohor Aiboni, Managing Director of SNEPCo, expressed pride in Bonga’s performance, stating that the increased production underscores the commitment of the company’s staff and its continuous efforts to enhance production processes and maintenance.

Aiboni also acknowledged the support of the Nigerian National Petroleum Company Limited and SNEPCo’s co-venture partners, including TotalEnergies Nigeria Limited, Nigerian Agip Exploration, and Esso Exploration and Production Nigeria Limited.

The Bonga field, which commenced production in November 2005, operates through the Bonga Floating Production Storage and Offloading (FPSO) vessel, with a capacity of 225,000 barrels per day.

Located 120 kilometers offshore, the FPSO has been a key contributor to Nigeria’s oil production since its inception.

Last year, the Bonga FPSO reached a significant milestone by exporting its 1-billionth barrel of oil, further cementing its position as a vital asset in Nigeria’s oil and gas sector.