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Last Updated: Thursday, 19 July 2007, 12:21 GMT 13:21 UK
Tycoon exits Nigerian oil deals
Fuel hawkers in Lagos
Shortage of production means the fuel black market is rife in Nigeria
Nigerian consortium Bluestar, led by tycoon Aliko Dangote, has pulled out of a deal to take stakes in oil refineries after protests by trade unionists.

Bluestar bought stakes in the Port Harcourt and Kaduna refineries in May in the last days of the administration of President Olusegun Obasanjo.

It prompted accusations of cronyism and fears over potential job losses.

Corruption, poor management, sabotage and a lack of maintenance have made Nigeria's refineries inefficient.

The nation's four refineries operate at about 40% of full capacity, but there has been a recent campaign by the Nigerian National Petroleum Corporation (NNPC) to say that it is capable of improving the management of the plants.

A BBC reporter in the capital Abuja says that Bluestar's withdrawal may allow Chinese oil firms to step into the breach.

General strike

Mr Dangote was quoted in the Nigerian media as saying that Bluestar was stepping aside for 12 months to allow NNPC to deliver on its commitment to improve output capacity.

He has faced accusations that he benefited from cronyism as he profited from other privatisations.

The sale of the refineries to Bluestar for a total of $721m was one of the factors that led to a general strike of four days in June.

Nigeria, Africa's biggest exporter of crude oil, relies on imports to meet its fuel needs of 30 million litres a day.

Mr Dangote had hailed his involvement in the Port Harcourt refinery, with a processing capacity of 210,000 barrels per day (bpd), and of the 110,000 bpd Kaduna refinery, as an improvement on state ownership.

But trade unions and opposition politicians pointed out that Mr Dangote is a major player in the fuel importation business, leading to a potential conflict of interest.

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