Monopoly Threats Hinder Investment – Dangote

Africa’s Richest Man Calls for Policies to Encourage Investment and Competition

Africa’s richest man, Aliko Dangote, has raised concerns about the impact of monopoly claims on local investment in Nigeria’s economy. He emphasized that such claims could discourage entrepreneurs from investing in critical sectors like the petroleum industry.

At the Inaugural Annual Downstream Petroleum Week organized by the House of Representatives Committee on Petroleum Resources (Downstream), Dangote Group was represented by its Chief Strategy Officer, Aliyu Suleiman. He called for policies that promote productivity, innovation, and competition across the economy.

Addressing Monopoly Claims

Dangote highlighted the importance of not using the term “monopoly” as a barrier to economic growth. He stated, “No one is prevented from investing.” The businessman encouraged others to build their own refineries and expressed willingness to support them in any way possible.

He pointed out that Nigeria has a natural competitive advantage in refining due to its proximity to oil and gas supplies. “We should work together to develop this sector,” he said, adding that it is crucial to enact and implement laws that will help the sector prosper.

Dangote also mentioned that the Dangote Refinery can meet the nation’s demand for diesel, premium motor spirit (PMS), and jet fuel, with excess capacity for export. This, he argued, would provide valuable foreign exchange for Nigeria.

Economic Transformation and Refinery Development

The Dangote Refinery is expected to be listed on the stock exchange, giving Nigerians the opportunity to become shareholders. Dangote noted that Africa’s refining sector remains underdeveloped compared to its consumption and crude production levels.

While Europe and Asia refine over 95% of their petroleum products, Africa refines only 40%. Sub-Saharan Africa has very few large functional refineries. Dangote explained that refining is capital-intensive, technologically complex, and often low-margin, which has led many to avoid it. However, he emphasized that Dangote Group is known for taking bold steps and making large-scale investments.

Building the refinery was a massive undertaking. Dangote mentioned that they collected over 2,700 hectares of land and pumped 65 million cubic metres of sand to stabilize the site. They installed over 250,000 foundation bars and laid millions of metres of piping, cabling, and wiring. At peak, over 60,000 people were on site, with 50,000 being Nigerians.

Refining Capabilities and Market Impact

According to Dangote, the refinery can meet all of Nigeria’s demand for diesel and jet fuel, with surplus for exports. It can also meet 90% of Nigeria’s PMS requirements, based on an official daily consumption of 50 million litres.

He noted that major oil producers typically meet their petroleum product needs through domestic refineries rather than imports. For example, the United States imports only about 8% of its petroleum products. Dangote believes Nigeria should aim for a similar level of self-sufficiency.

Business Philosophy and Pricing

Dangote Group’s strategy is to provide high-quality products at attractive prices across all businesses, including cement, sugar, and refining. He highlighted that refined products from the Dangote Refinery are of higher quality but priced below import parity and average African prices.

This cost benefit for Nigerians is significant, even though the real market price was previously masked by subsidies. Dangote pointed out the paradox of Nigeria importing petroleum products while the Dangote Refinery exports them.

Government and Industry Collaboration

The Speaker of the House of Representatives, Tajudeen Abbas, described the Dangote Refinery as a catalyst for Nigeria’s energy sufficiency. Despite spending over $18 billion on maintenance for state-owned refineries, Nigeria continues to rely on imported petroleum products.

Recent discussions about the possible sale of these refineries have been met with criticism from the House of Representatives Committee on Petroleum Resources. The Speaker emphasized the need for the National Assembly to create a functional environment for industries to thrive.

Abbas urged stakeholders to come up with innovative solutions to revamp the downstream sector and contribute to the country’s development. He stressed the importance of collaboration between government, industry, and investors to address challenges and develop practical solutions.

Sector Transformations and Future Goals

The Chairman of the House Committee on Petroleum Resources (Downstream), Ikenga Ugochinyere, advised labor unions and industry players to address pending issues through constructive engagement. He highlighted ongoing projects, including the Dangote Refinery, Waltersmith Modular Refinery, OPAC Refinery, and Indorama Petrochemical expansion.

The Minister of State for Petroleum Resources (Gas), Ekerikpo Ekpo, noted the remarkable development in Nigeria’s downstream sector under President Bola Tinubu’s leadership. He emphasized the importance of addressing infrastructure deficits, market volatility, and supply chain inefficiencies.

Ekpo called for sustained collaboration between government tiers and the private sector to drive reforms that make energy more affordable, accessible, and sustainable for all Nigerians.