Nigeria -Failed Privatisations.

The controversial sale of the Port Harcourt and Kaduna refineries to the local Blue Star Oil Services consortium collapsed in mid-July 2007 because of objections by NNPC and powerful petroleum labour unions. The unions had staged a strike in May and threatened to target crude oil exports unless the sale was reversed. These and other opponents of the privatisation process compelled President Umaru Yar'Adua to review the privatisations, which are being investigated by the Senate.

In May 2007, Blue Star (controlled by influential Nigerian tycoon Alhaji Aliko Dangote) had bought 51% stakes in Nigeria's biggest refining complex at Port Harcourt (210,000 b/d) for $561m and the Kaduna refinery (110,000 b/d) for a mere $160m. Dangote is a major financier of the ruling People's Democratic Party (PDP) and ally of ex-president Obasanjo, who had hand-picked Yar'Adua as a presidential candidate for the April 21, 2007, elections. A spokesman for the privatisation agency, the Bureau for Public Enterprises, on May 28, 2007, was quoted as saying: "We are handing over Port Harcourt and Kaduna refineries to Dangote today".

That was on the eve of Yar'Adua's swearing in ceremony, as Obasanjo stepped down after eight years in the presidency. In the weeks leading up to Obasanjo's departure, Dangote's privately held company had scooped up a cement plant, a telecoms licence and mining concessions in a rush of privatisations which triggered accusations of cronyism by opposition parties.

Dangote got the Kaduna plant after Abuja rejected as too low a $102m bid by the state-owned China National Petroleum Corp. (CNPC) at an auction held on May 17. In that auction, Dangote's Blue Star quickly pledged to pay $561m for the Port Harcourt stake, thus out-bidding the Indian company, Refinee Petroplus.

Blue Star includes Nigerian conglomerate Transcorp and its unit Transnational, local fuel retailer Zenon Oil and Gas, and Sinopec of China. Transcorp and Zenon have had 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 (see the background in down6NigrRefAug6-07).

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