Oil Report

Obasanjo ally buys second Nigerian oil refinery

LAGOS, May 28 (Reuters) - Nigerian tycoon Aliko Dangote has acquired a controlling stake in Nigeria’s third-largest refinery in Kaduna for an undisclosed sum, consolidating his grip on the OPEC member nation’s refining sector.

It was the second major refinery purchase in a week by Dangote, who is a major financier of the ruling party and ally of outgoing President Olusegun Obasanjo, after he bought the largest refinery in Port Harcourt on May 17.

“We are handing over Port Harcourt and Kaduna refineries to Dangote today,” a spokesman for the privatisation agency, the Bureau for Public Enterprises, said.

He declined to give details of the Kaduna sale until after a ceremony planned for later on Monday, the eve of Obasanjo’s retirement.

President-elect Umaru Yar’Adua is due to succeed him.

In the weeks leading up to Obasanjo’s departure, Dangote’s privately held company has also scooped up a cement plant, a telecoms licence and mining concessions in a rush of privatisations that has triggered accusations of cronyism by opposition parties.

Dangote got the 110,000 barrels-a-day Kaduna plant after the government rejected as too low a $102 million bid by China National Petroleum Corp. (CNPC) at the May 17 auction.

In that auction, a consortium led by Dangote called Bluestar paid $561 million for a controlling stake in the Port Harcourt refinery complex, which can process up to 210,000 barrels a day.

The Bluestar consortium also includes Nigerian conglomerate Transcorp TCNP.LG, fuel retailer Zenon, and China's Sinopec 0386.HK. Transcorp and Zenon have close ties to Obasanjo.

The government had been trying to privatise the refineries since 2002, but many potential buyers had been scared off by uncertainty over environmental and labour liabilities, and fuel prices which are fixed by the government.

In an unexpected move on Sunday, Obasanjo hiked the government-regulated pump price of fuel by 15 percent to 75 naira per litre.

None of the refineries are working because of mismanagement and sabotage, and Africa’s largest producer of crude oil is entirely reliant on imports to supply its fuel needs, worth more than $6 billion a year.

Nigeria awarded CNPC four oil exploration licences last year in exchange for a promise to invest $2 billion in the Kaduna refinery, the government said at the time of the award. It was unclear whether CNPC would still be able to keep those licences.