- 00:00Don’t go to. Thank you so much for speaking to
Bloomberg. You have the refinery.
It’s opened. How does it feel?
It feels like a milestone from the outside.
How does it feel for you? I think it feels really great.
It is really a great achievement is something that 90% of the entire world
did not really give us a chance. Nobody really believe we can pull it
off, but we did. And you know, it is a great satisfaction
to me personally as a person and also to the organization.
So I think we have done very, very well and quite a lot of things when you look
at where we’re coming from.
You know, Nigeria being an oil producing country and we’ve been importing
petroleum products for the last 35 years, just doesn’t make sense.
I mean, from the outside, it looks quite difficult.
Any regrets? I think no regret.
I would have said there is maybe a bit of regret if we hadn’t succeeded in
delivering. But, you know, to tell you the truth, it
was a very, very it was a monster month. And I keep telling people if I knew how
difficult it was to put in this kind of, you know,
edifice, this kind of refinery, I wouldn’t have sold it at all.
But, you know, so but by the time we realised that it was a very difficult
thing, we had already started. So we had no choice than to deliver.
But what’s the hardest bit? So you have a relationship with the
government there? Getting rid of subsidies.
You have to find the crude, you refine it, you sell it back.
I think that is not really only the hardest well, the hardest part, Francine
is delivering the project on this one. We never, ever expected the kind of
challenges that we face. You know, we launched the project in
2013 and then we had a lot of problems with the
said government. You know, it’s not the federal
government. You know, of course we have three tiers
of government. So where we bought a land, you know, it
was in a state not far away from Lagos and the guy drilled us for almost about
three and a half years, and we had to now move the refinery to Lagos.
We go to Lagos, we have community issues.
So it took us really five years to start.
This buttoning up to what already take in loss of about 2.4 billion to set and
interest was counted but then still went ahead.
Then again, the challenges of building that kind of, you know, project, we
realized that, you know, we have to build our own fort, will build a port of
gold in the port. We realized that nobody could supply
cranes equipment. So we had to take something that people
don’t know or they don’t realize what we did.
Now, we now made ourselves as the EPC contractor, which is engineering,
procurement and construction. So we did it on our own because we have
never, ever handled this kind of this kind of project, a handle by Saipem, by
Bechtel. You know, the big guys.
But we took that challenge and that is why people believe that, no, it will
never work. So the government wants to get rid of
subsidies. Will your refinery help with that?
Well, the government you know, subsidy is a very sensitive issue.
If, you know, I believe the problem is not only the subsidy, it is problem that
once you are subsidizing something, then people will be brought in the numbers
and government will end up paying what they are not supposed to be paying.
But this refinery will bring quite a lot of issues up there.
You know, it will show the real consumption of Nigeria because, you
know, nobody can tell you. Some people say 60 million liters of
gasoline, but some say you it’s less. But right now, if you look at it, but as
producing, okay, everything can be counted, right?
So everything can be accounted for. Most of the trucks or ships that will
come and not from us are going to actually, you know, put a tracker on
them to be sure they are going to take the oil within Nigeria.
And that, I think, can help the government to save quite a lot of money.
So do you think it’s the right time to get rid of the subsidies?
I think it is, you know, because all countries have actually gotten rid of
subsidies. Let me give you an example.
Saudi Arabia used to give what Saudis, the citizens believe that, look, oil is
on God given gift. So the government should have charges
for it. So government will sell it at a very low
price. But today, as we speak.
Gasoline is about 40% cheaper in India, in Saudi Arabia.
Which I think doesn’t make sense. That is what.
Number two, the price of gasoline is about 60% of the price of a neighboring
countries where very porous borders. So it is not sustainable.
You know, I mean, the amount of subsidies that were paid.
Government cannot afford those subsidies.
Do you need the government to take away the subsidies for your refinery to be
viable? Well, you see, we have a choice of
either one. We produce, we export and one we
produce. We sell locally.
But we’re a very, very private company. And yes, it’s true.
We have to make a profit. We build something worth $20 billion.
So definitely we have to make money. The removal of subsidy is totally
dependent on the government, not on us. We cannot change, you know, price.
But I think, you know, the government will have to, you know, give up
something for something. You know, so I think at the end of the
day, the subsidy will have to go. But what we have done now, we know with
the government, which I think I must really thank the president of Nigeria,
President Bola Tinubu, you know, very creative idea that, okay, you know what?
We will sell you the crude in naira.
You also sell in naira. So now we can out
for the exchange rate is going to be price
normal price in you know if crude is $80.
You know Brent you know we will pay that price will use an agreed exchange rate
and then we will also sell in the domestic market.
What that will do is is going to remove 40% pressure on the naira.
So because you see the petroleum products consume about 40% of foreign
exchange. So, you know, it is like you have 40% of
demand being taken out. So that can actually stabilize the
naira. That’s one.
Number two, the government will now know it means they won’t subsidize.
They will know what is the real consumption, because right now nobody
can tell you what to do. It’s all guesswork.
You know, so that can help in terms of stabilizing the market.
That can also help in terms of removing queues because we have a lot of queues
and these queues are not there today. They’ve been on and off since 1972 for
the last 52 years. But so what does it mean in dealing with
now and what does it mean for your group?
Is it a benefit or actually just gives the government something that they want?
I think it really is to give the government something that they want.
It’s a win win, you see, because the issue that, yes, we’re an endurance and
we have to also do something to show that, yes, we do care.
And part of caring is to now agree with the government that, okay, fine, let’s
go ahead and do this then, because it can be very awkward for somebody like me
or a group to come and say that we want to deal in, you know, dollars.
I think it’s a win win and it would benefit the country quite a lot.
The whole thing is actually, okay, fine, what do we leave as a legacy?
And I think doing this, but even making sure that, yes, we’ve taken Nigeria out
of an oil I mean, petroleum products import country for the first time in the
history of Nigeria is a great milestone, which, you know, I’m very, very proud
about. So how’s the relationship with the
government? I know there’s there’s a number of
negotiations, including the price of gasoline.
What kind of offering have you made? I think we have quite a good
relationship, you know, to the, you know, the government and, you know,
where the president actually put the minister of finance and also myself to
coordinate, you know, the economy and then the
special adviser revenue, you know, a very smart guy, Zach
Adedeji, you know, and they are working out something which I think it would be
a win win between us and the APC if NNPC is that is the Nigerian National
Petroleum Corporation. If the refineries if this had to work,
then Nigeria would be one of the biggest exporters of petroleum products in
Africa. You know, in Africa, only two countries
are self-sufficient, which is Algeria and Libya, but all other countries are
importers of petroleum products. So.
So what kind of agreement are you expecting actually within?
I think the kind of agreement that was kicked in is to have a very robust
agreement. Well, first of all, we have energy
security where they won’t be for the crude they would give us.
Crude already have agreed that, for example, in October
they will give us 12 million barrels, which is averagely about 390,000 barrels
a day, which will fine. We’ll sell both gasoline, diesel and
aviation fuel and if this any excess will export.
But, you know, the refinery is also versatile where we are producing a lot
of things. It’s not only these three things that I
mentioned. We are also into polypropylene, you
know, which is petrochemical, which 80% of it is also to be exported by 20% is
what the demand is in Nigeria, which will also sell to help a lot of
plastic industries. So but with the government, I think the
agreement will be the occupying. When we take that in, we will now sell
to everybody. So it means that 50% or 60% of petrol
stations that have not been working or they’ve been out of work, everybody will
not be at work. It will reduce the cost of having ships
floating all over Lumi you know, I mean paying demurrage, demurrage alone, we’re
going to save over $1,000,000,000. And I mean, there seems to be
disagreements on how you price your gasoline with NNPC.
Have you settled on a price? Can you give us more clarity on what’s
going on? Well, what is going on there was it
wasn’t really a disagreement. Passi
NNPC bought from us this particular one on the 15th of September at the
International Price, which they also bought about 800 over
800,000 metric tonnes of gasoline imported.
So the one that they bought from us actually is cheaper than doing the
import. And so when we announce a price,
the guy I don’t know whether he was authorized, but it wasn’t really the
real price. What they have announced is most likely
that is what it. Close them, including four players,
including whatever you know, which they have never added profit to their cost.
And then the other one is one that they imported.
But the people don’t know how much they spent in terms of the input, but their
own importation, one is almost nil, may be about 15 20% more expensive than
ours. You know, so what this was to do is to
sell at a basket price, or if they want to move subsidy, they can announce that
they will remove subsidy, which is okay, anybody, you know, logistics.
But you’re not worried that some of the oil majors, because of their vast
resources, can sell for cheaper? Well, yes,
most likely. You know, because in business is the you
know, I’ve said this in my interview before where I said that I never knew
that the oil industry. Mafia are stronger than the drug cartel.
Is a big cartel. You know, I will say this anyway.
The issue that you are right because you fight, you know, to make sure that is in
fact it doesn’t work, will keep selling cheaper.
But right now they won’t be able to sell cheaper because they will not be able to
take local currency. We will take a look at currency.
We have the refining capacity not only to satisfy and you have refining
capacity that is almost twice the condition of Nigeria, but you’re also
confident that you can strike a deal with the authorities.
No, we will definitely strike a deal. The president has announced the soon the
we is going to start 1st of October. You know, so I think between now and the
next couple of days, they will come out. With a very, very clean agreement.
It’s a it’s a pretty big accusation that you say, you know, they’re run like a
cartel and they could price me out. What’s what’s your ideal scenario?
So how much of the crude would you refine and sell domestically?
Like, if you have a blueprint of the kind of agreement that works for you,
for NNPC and for the government, what does it look like, what that agreement
will look like? Because we’re going to now have a
discussion with the government where we will have doing for the domestic market
which government will not give anybody dollar to buy.
So people will know we won’t have like a circular economy in the sense that it
will all the transactions will remain within Nigeria.
You know, bankers in letters of credit, everything will be in naira.
But the one that we’re going to export, we also have our own plans to make sure
that, yes, we don’t fall in the hands of some of these checks.
You know, we have our own plans and we are also plan as they are planning.
We’re also planning our own because we have the plans to survive and I’m sure
we’ll do so. Does refining Nigerian crude actually
shorten the yields for the refinery? No, it isn’t shift in the world.
It gives it’s a very good yield. But, you know, you have to mix different
Nigerian one, the WTI, Brazilian, you know, so a couple of
these and we have to do that. It depends on what you call the LP
model. So if we do that, then we will know
which one will have in terms of yield. But, you know, our refinery also is
designed to produce 93% of high valued thing, you know, from polypropylene
gasoline, diesel aviation fuel, very small enough to not only have about
36,000 tonnes and then the raw material carbon black,
but the no residue which is the cheapest product, is less than 7%.
So that makes our refinery, you know, to be very profitable, you know, you know,
refinery. But, you know, this is something that
you build for a long time. You know, it’s not something that you
use. If it’s a question about making when you
look at it in the last seven years, if we as a group have taken this money, we
invested and invested in the stocks of Microsoft, in
Tesla, in, you know, in Google, I mean, our would do this.
We would have been over one years of $1,000,000,000.
But you’re confident you can make this work.
What are you going to invest more in the sector?
Why not go upstream? We we you know.
Well, upstream, you know, in also upstream, not big.
We have two oil blocks, which we have and were such in production this
October. But we want to look at more of the
downstream. You know, because in oil oil you can
produce over 6800 items. You know, so now we’re doing
polypropylene. We’re going to double our size in
polypropylene. We’re going to also do about 500,000
tonnes of polyethylene. And then, you know, we’re also doing on
the other side a different company, which is also owned by us.
We’re doing about 3 million tonnes of urea.
So we’re also double that. So there is
love benzene, which is raw material for making detergent.
Nobody produces that in Africa. So these are the smaller projects which
we want to do and we want to really try and add to this in the next one obvious.
So you would invest in actually getting the oil out of the ground?
Well, I think well, I don’t want to put too much money there.
I already have one, if any. As it comes around, you know, we can
pick it. But is it the intention of our group to
make sure that we produce our own raw material when we would do that?
We will not target to go and produce three 400,000 barrels per day.
We don’t have that plan as we speak today.
I think there was confusion. The NNPC was meant to take 20% of the
refinery. It’s now 7%.
Yes. What happened?
What happened? I think we agree with them.
We give them a good deal. Well, we said fine.
We structured an agreement. The first agreement was that they’re
going to pay us $1,000,000,000. The deal was about 2.79 billion.
And then the balance of the money, $1 billion, which they paid us about a
year and a half ago. And then the balance of the money was
split into two. One portion is that ever accrued the
supply to us 300,000 barrels. Then we’ll deduct $2.
Yeah. And then up to the time they finish
filling that in, no one said, the other one said will come out of their own
profit. So what an opted out the No, no no the
is a little bit confused. I mean it’s a bit of the confusion.
They want this agreement to be changed where they
want to be cash. They don’t want that.
We always say, okay, fine, we signed the agreement, you know.
You know, cancelling the other one. The new agreement that we signed was for
them to pay us up to one year. No interest and nothing up to one year
do pay as well as a 1.8 billion. The month for them to pay was June and
June. They came back to us and said, No,
they’ve changed their minds. They want to remain at 7.2%.
So we can fighting. So we we left it and
we all now the rest of the shares, they own 7.2% and we own the balance of the
shares and that’s what it is. But I think they made a big mistake.
But it’ll stay that way. There’s no negotiation or talks
in the agreement. That means the finished dead completed
is 7.2%. That’s why we are right now.
And what did the offices actually get raided in January?
Well, the the issue is there was nothing, you know, I mean, they came to
us and say, okay, fine, they are looking for some documents.
I say, what are these you are bidding in terms of, you know, for the exchange.
And so here we have this and but yeah, example 15 years documents when we have
them. So we sent the people out there to go
and take the documents. They don’t go back.
We go to come to our office, you know, and the, the before we knew it, you
know, the already in office, the office really was no, really.
They visited the office and they didn’t talk to anybody.
They didn’t know to arrest anybody. They just came and, you know, and left
just to register an embarrassment. And that’s all by law, the way we run
our own organisation. And that is why when you look at it,
France in were the highest tax paying. Cooperation.
And then, you know, a company paid in 2023 more taxes than the entire banking
industry. And that is why, you know, so whatever
we do, because we know that, yes, we’re of there anybody where there is a new
government or whatever happens, we’re the first port of call.
So that’s why our own behavior has to be 100% clear.
And that’s settled. You don’t expect I mean, that’s what in
January, that’s all you know. And if any time somebody wants to
exercise would be fine. What about your own tactics?
What about this fire? We don’t have any issue.
You know, people really don’t understand also what we owe to the economy.
But in a very short period of time, people do understand our own
contributions to the economy, like fertilizer plant is only, what, 50% of
capacity? It was 50% capacity.
Well, in the last about in the last one month or so, we
have enough gas. So we have started now to 85%.
You know, I hope it will continue. But, you know, there is also the gas,
which is the coal. It all B3 obviously is a gas pipeline
which is bringing gas from the east to the west, because in the west they have
industries. So that’s where the demand is.
In the east, the gas is there, but no demand.
If they have that which they promised that they’re going to finish in October,
then we’ll have more gas than we need it.
You know, So I think that issue is being resolved and that is
why we’re also trying to invest more by Putin of another plant to double our
fertilizer plant from 3 million to 6 million tons.
So the refinery is built. I know you’re the biggest arsenal, one
of the biggest Arsenal fans. I know.
And you do you still want to buy the club
for as that time has passed? The last time when we had this
interview, I told you that, yes, as soon as I finish with the refinery, I’m going
to try and buy Arsenal. But the issue is that, you know, it was
not going to be close to the old in the arsenal is doing extremely well.
That time, Arsenal wasn’t doing well. I think, you know, I don’t have that
kind of excess liquidity to go and buy a club for $4 billion, so to speak, and,
you know, use it as a promotional something, you know, rather do something
for the money. What I will do, I’ll continue to be
biggest fan of Arsenal. I watch the, you know, games every day
any time that they are playing a lot. So I will remain a major supporter of
Arsenal. But I don’t think if it makes sense
today to buy Arsenal. Do you regret not buying it before I
spoke? Actually, I regret not buying it before.
But you know, the my money was more needed in completing my project than
buying azimuth. So you would have bought it for 2
billion. Bought it for 2 billion.
Yeah. But, you know, I wouldn’t have been able
to finish my project, you know, so it’s either finish, you know, project by buy.
And I think the best decision was for us to now go and complete our refinery, of
which a lot of people don’t believe it is going to work.
You remember you interviewed me about this in my family.
And our refinery really has been the I mean, it has been a discussion point all
over the world. Yes.
Because our capacity is about 1.1% of the entire global refining capacity, not
without challenges. It’s had challenges.
A lot of challenges. A lot.
But you do it. Would you do it all over again?
I wouldn’t do this kind of huge refinery project again.
You know, you can see I mean, you know, I mean, I told somebody doing this,
refineries would actually, you know, give me my career.
Thank you legal for your time today the exhibitors for I said good to see you
and I hope we see very soon again.
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