By Mahmud Shuaibu Ringim
In a free-market economy driven by the forces of supply and demand, entry into a market is typically determined by competition, not regulators, especially in a deregulated environment. However, Dangote Refinery finds itself in a perilous position within the treacherous waters of the oil industry—a sector its founder once described as more vicious than a drug cartel. Sadly, his fears seem to be coming true.
The refinery’s scale and technological superiority have disrupted the status quo, upsetting many powerful interests. These include dominant global oil players, often referred to as the “Seven Sisters,” as well as Nigerian stakeholders who have long profited from the inefficiencies of state-owned refineries. Dangote’s refinery has already begun to displace European suppliers in the West African subregion, especially in the supply of aviation fuel and other petroleum products.
For years, the Nigerian and West African markets have relied heavily on imported petroleum products from Europe. This reliance allowed the Nigerian government to justify the payment of subsidies. Now, with the Dangote Refinery’s potential to meet local demand, there is a threat to those entrenched interests. This has led to various attempts to undermine its success, with the Nigerian National Petroleum Company Limited (NNPCL) reportedly creating obstacles that prevent the refinery from thriving.
Initially, accusations surfaced claiming that Dangote’s refinery was producing substandard products. Additionally, concerns about monopolistic tendencies were raised, with the refinery being forced to sell its products to the NNPCL at a predetermined price. Furthermore, discussions about outsourcing the management of NNPCL refineries were introduced, seemingly as a strategy to intimidate Dangote with increased competition.
Meanwhile, Nigerians continue to bear the burden of high prices for imported petroleum products, all while Dangote’s refinery is being restricted from fully entering the market. The broader impact of these constraints is not just on Dangote’s business but on the national economy. If allowed to operate freely, the refinery could significantly reduce the demand for foreign exchange by up to 40%, which would, in turn, bring down the prices of essential commodities, including petroleum products. This could lead to a substantial decrease in transportation costs, lowering food prices and making a tangible difference in the everyday lives of Nigerians.
President Bola Ahmed Tinubu may not be fully aware of the broader implications of these policies or might be misinformed. The current situation puts Dangote Refinery at a disadvantage, one that could have serious political repercussions. As Nigerians struggle with high living costs and increasing poverty, the refinery holds the potential to unlock economic prosperity. Failure to support its growth could endanger not only the economy but also the political landscape, potentially costing the president a second term.
The politics being played around Dangote Refinery is detrimental to the nation’s economic well-being. The government must prioritize the welfare of its citizens above all else. Allowing Dangote Refinery to navigate the dangerous waters of the oil industry will lead to a stronger economy and improved livelihoods for the Nigerian people.
Mahmud Shuaibu Ringim
HALIM Consulting Ltd
mahmudshuaibu44@gmail.com
