Nigeria’s oil politics and the other side of Dangote’s conglomerate

In 2024, Nigeria eagerly awaited the start of operations at the Dangote Refinery, a project seen as a potential game-changer for the nation’s oil-dependent economy. Aliko Dangote, Africa’s richest man, had built a business empire across several industries, and many hoped that his entry into oil refining would ease the burden of inflated fuel prices. Yet, nearly a year after the refinery’s launch, the anticipated relief remains elusive. Instead, the landscape has become one of tension between Dangote, the Nigerian National Petroleum Corporation Limited (NNPCL), and oil marketers. What should have been a celebrated achievement has become a battleground of monopolistic ambitions and conflicting interests.

Dangote’s dominance in various sectors of the Nigerian economy is undisputed. From cement to sugar, his conglomerate has achieved a level of control that has raised both admiration and concern. His impact on Nigeria’s infrastructure development, particularly through Dangote Cement, has been substantial, contributing to large-scale construction projects across the country. Yet, this dominance has also led to criticism, particularly from competitors who argue that Dangote’s success is not just a product of business acumen, but of government-backed favouritism.

In the cement and sugar industries, for example, Dangote’s market share has been so formidable that it has forced many competitors to scale down or exit the market altogether. Smaller players have found it increasingly difficult to compete with Dangote’s vast resources, advanced technology, and extensive distribution networks. While some might argue that Dangote’s efficiency and scale allow him to provide more affordable products, others see his dominance as a threat to competition. The concern is that his ability to control the supply of essential commodities like cement and sugar could lead to price manipulation or reduced quality.

Read also: 11 Plc, Total Energies, AA. Rano, others pay N766/litre to lift Dangote petrol

This concern is now extending into the oil sector, where Dangote’s refinery could potentially control the majority of Nigeria’s fuel supply. If Dangote’s refinery becomes the dominant player in the fuel market, there is a risk that consumers may face limited choices, higher prices, or even supply disruptions. Moreover, smaller refineries and independent oil marketers could be squeezed out of the market, further reducing competition and limiting the options available to consumers.

The fear of monopolisation in the oil sector is not unfounded. Dangote has long benefited from close ties to the Nigerian government, securing tax waivers and concessions that give his businesses a competitive edge. One notable example is his involvement in the rehabilitation of the Oshodi-Apapa Expressway, a project that allowed Dangote to offset tax obligations in exchange for infrastructure investment. While such deals are not uncommon, they raise questions about the true cost of these concessions to the Nigerian taxpayer.

Moreover, recent reports that Dangote’s refinery is selling fuel at prices higher than imported alternatives have raised concerns about his intentions. While the refinery was supposed to reduce Nigeria’s dependence on imported fuel and lower prices for consumers, it seems that the opposite may be happening. According to the NNPCL, fuel from the Dangote Refinery is being sold at a higher price per litre than imported fuel, casting doubt on whether the refinery’s operations will ultimately benefit ordinary Nigerians.

Still, it is important to recognize that Dangote’s business ventures have played a crucial role in reducing Nigeria’s reliance on imports in several key sectors. His investments have created jobs, spurred innovation, and helped stabilise prices for essential goods like sugar and cement. However, the scale of his influence now threatens to stifle competition in the oil industry, a sector that is vital to the country’s economy.

The Nigerian government must ensure that no single entity, no matter how powerful, is allowed to dominate the oil market to the detriment of competition. A level playing field is essential if Nigeria is to achieve sustainable economic growth. While the Dangote Refinery represents a significant achievement, it must operate within a regulatory framework that promotes competition and ensures that consumers benefit from lower prices and improved services.

As Nigeria seeks to diversify its economy and reduce unemployment, it is imperative to foster a competitive business environment that encourages innovation and entrepreneurship. The emergence of monopolies, such as the potential dominance of Dangote’s refinery in the oil sector, can stifle competition, limit consumer choice, and hinder the growth of smaller businesses.

It is a disheartening reality that Nigerians are forced to rely on a single refinery, despite having four others that remain non-functional due to various factors. Allowing a monopoly to take hold in the oil sector would put the entire nation at the mercy of a single entity, akin to a puppeteer controlling its puppets. The oil sector is a vital lifeline for Nigeria’s economy, and its survival depends on a healthy, competitive market. Therefore, it is essential to actively promote competition and discourage monopolistic tendencies at all costs.

Maxwell Adeyemi Adeleye is a United Kingdom based Strategic Communications Expert and Real Estate Broker.