It is business for the banks and they are doing what they have to do: make money. But for the national oil corporation, NNPC, I am not sure what to write here. Yes, borrowing money from banks to buy shares in Dangote Refinery when you could have borrowed the same money to fix the four refineries you have built, but unable to maintain, seems odd. But what can we say since there are paid commenters who are now employed by the government to discredit any critical commentary (thanks Senator Shehu Sani for that revelation). I take you to that African proverb: “nwa nnunu bere na ikwubo ka no n’ala” [a bird which flies from the ground to the anti-hill might have thought that it had left the ground, but when you look critically, it is still on the ground].
Nigerian state oil company NNPC has signed term sheets with Dangote Group to buy a 20% stake in the company’s oil refinery under construction in Lagos state, NNPC’s director said on Tuesday.
Mele Kyari said NNPC is in talks with banks to borrow on the back of its cash flow to buy the stake in the 650,000 barrel per day (bpd) refinery. He declined to put a dollar figure on the stake, but said the refinery is worth an estimated $19 billion.
As Chinua Achebe will write, proverbs are like the kola nuts upon which words are eaten. Nigeria, good luck investing in Dangote Refinery. But remember the new market regulations: Dangote Refinery by law should not offer you a different price than it offers to other customers under the same conditions just because you are an investor. If not, I will call Access Bank to waive fees on my bank transactions as I am a mini-investor!
Simply, it does not make sense to me why we need to follow this borrow-invest path. A better playbook would have been this: place an order and get a bulk discount once the refinery is running. Of course, we defer to our leaders as they have data which drives these decisions.
Meanwhile, congrats to Dangote Refinery: it is already winning. Playing as I wrote in my book – The Dangote System. It is called Conglomerate Tax: citizens and nations pay huge penalties for conglomerates to serve them!---
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