3 months ago
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President of the African Development Bank (AfDB), Dr Akinwumi Adesina has said the rift between Dangote Refinery and the Nigerian National Petroleum Company (NNPC) Limited is sending a wrong signal to global investors about the investing climate in Nigeria.
This is as Nigerian billionaire, Femi Otedola, has called for support for Aliko Dangote, the CEO of Dangote Refinery, amid the ongoing dispute with national oil regulators.
Both Adesina and Otedola warn that the ongoing spat sends negative signals to potential investors about Nigeria’s business environment.
Adesina said the dispute that has broken out between NNPC and Dangote refinery is a needless odium for Nigeria at a time the country should be building partnerships for rapid development.
“This whole disparaging of Dangote is uncalled for. It is self-defeating. And it is very bad for Nigeria. Who will want to come and invest in a country that disparages and undermines its own largest investor?”
He added, “investing is tough. Pettiness is easy. It sadly sends a signal that the price for sacrificing for Nigeria is to get sacrificed.”
In a statement, the head of the continental financial institution said “monopoly often exists where there are high barriers to entry or high capital costs.
“How many individuals or companies can do railways? How many can do refineries of the scale of Dangote Refineries?”
According to Adesina, “in a nation that has been importing refined petroleum products for several decades, the abnormal simply became very normal. No smart investor would make a $19.5 billion investment and want it to be undermined by importers.
“To manufacture is extremely expensive and risky. This is even more so in Nigeria, given the very challenging business and economic environment, fraught with policy uncertainties and policy reversals, and where the self-defeating default mode of “simply import it” is always so easily rationalised and chorused to solve any problem.
“Competition is good for everyone. But is Dangote refineries anti-competitive? What is the evidence?
“Has Dangote refineries prevented any other company from setting up refineries? Why have others not done so? How come they have not done so for several decades? Was it Dangote that held them back?”
He explained that Dangote refineries surely cannot be asked to ‘compete’ with importers of petroleum products. “That is not competition. Let the importers set up local refineries and compete by refining in Nigeria. That is fair and justified competition,”
Adesina said, adding: “we cannot and must not undermine, disparage or kill local industries, let alone one that is of this scale — a jewel of industrialisation in Nigeria.
“It is more than simply delivering the cheapest product to the market; it is about domestic supply security, driving (and yes, protecting) globally competitive industries, maximising forward and backward linkages in the local economy, job creation, reducing forex expenses and shoring up the Naira. We must not be myopic.”
On his part, Otedola joined numerous stakeholders in urging the federal government to support industrialists like Dangote, similar to how other governments back their “local champions.”
In a series of X posts (formerly Twitter) on Tuesday, the multi-sectoral business mogul said Dangote had built “the largest single train refinery in the world, the second-largest sugar refinery in the world,” which emphasize that he is the highest taxpayer in Nigeria.
Otedola said business titans like Dangote are necessary in the early stage of a country’s industrialisation growth and must be encouraged and protected.
According to him, such trends can be found in the United States with the likes of “Cornelius Vanderbilt, John D. Rockefeller, Andrew Carnegie, J.P. Morgan, and Henry Ford,” adding that these are men who built the country’s industrial landscape.
He further mentioned other industrialists in India, South Africa, China and other places whose governments have assisted in providing the necessary incentives to grow various industries in their respective nations.
“In Nigeria, we have our own titans, and it is imperative that we recognise and support them. Aliko Dangote has broken every boundary in worldwide business and industry.
“His contributions are not just a testament to his brilliance but a beacon of what is possible when vision meets opportunity.
“Supporting local champions like Dangote is crucial for our national development and economic independence. Let us continue to foster and support these visionaries who drive our nation’s progress,” Otedola added.
Also wading in, Bloomberg reports that the evolving tussle is an uncharted territory.
The media giant said, stung by accusations from his home nation’s government that he’s seeking a monopoly for his $20 billion oil refinery, Aliko Dangote has dropped plans to build a huge steel mill in the country for fear of similar allegations.
Bloomberg noted that at stake is the health of an economy that’s struggled to attract investment, and the fate of Dangote’s refinery, the continent’s biggest, is in the balance. Without it, Nigeria — Africa’s largest crude-oil producer — will need to import almost all of its motor fuel.
Nigeria’s downstream regulator has said Dangote is seeking a ban on diesel imports to boost the viability of the plant and questioned the quality of its fuel. That follows the billionaire saying the state oil company has reneged on a deal to supply it with 300,000 barrels of crude a day.
“Building a refinery like this is supposed to be a pride for everybody,” the billionaire said, accusing the regulator of wanting to continue issuing import licences for fuel (a lucrative source of income for Nigeria’s elite for decades) instead of allowing his refinery to thrive.
For Dangote, whose business empire was allowed to flourish under previous administrations in return for him investing billions of dollars, the dispute is a shock.
“Access and favours matter. And Dangote in cement was always accused of benefiting from a monopoly,” said Antony Goldman, founder of Promedia Consulting, a political risk-advisory firm. “Some critics say they fear a monopoly but omit to mention a status quo that relies on imports, importers and intermediaries.”
There’s unlikely to be a winner in this clash of titans, and ordinary Nigerians will also pay a hefty price.
The tussle between Dangote and the NNPC began after the chief executive of Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, claimed that the Dangote refinery had requested the regulator to stop giving import licences to other marketers to be the only fuel supplier in Nigeria. Ahmed also alleged that the refinery’s product is inferior in terms of quality.
In response, Dangote expressed his willingness to sell the refinery to the NNPCL, stating that if they take over, the allegations of monopoly would no longer be valid.
The federal government has intervened, facilitating a meeting to resolve issues affecting the Dangote Refinery’s operations, which are crucial for reducing Nigeria’s reliance on imported fuel.
The minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, who intervened in the rift, uged all parties — Dangote, NNPCL, NMDPRA, and NUPRC — to work together for the development of the industry.
However, Nigerians on social media have called out International Oil Companies (IOCs) and saboteurs, urging the federal government to protect the Dangote Refinery
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