To the haters of Dangote refinery
Ever since the man built what is the largest refinery in Africa, the name Aliko Dangote has been a topic of discussion for both fans and critics alike. While the fans marvelled at the man’s recent feat — the building of a world’s largest, the largest single-train refinery — critics like yours truly have snarled at the perfect timing of the refinery’s completion and the removal of the controversial fuel subsidy by the Nigerian government. Was it just a coincidence or is there a sinister conspiracy to hand over a massive monopoly to Dangote?
Running with the second option, Ola Animashaun, a contributor at Punch Newspaper, one of Nigeria’s respected dailies built a case against Dangote. According to Animashaun, asides from the saved shipping costs that would have otherwise been spent on importing petrol, Nigerians wouldn’t benefit much from the Dangote refinery situated at the Lekki Free Trade Zone, Lagos as the transactions would be conducted in dollars. Dangote would sell Nigeria and other neighbouring countries petrol in dollars.
Going further, Animashaun not only suggested that the Nigerian government lacked the framework to regulate monopolies like America and Europe which have “anti-trust laws,” he also inferred that elements exist within the Nigerian government who encouraged Dangote’s monopolies like in the instant refinery saga.
In as much as I am all for constructive criticism through journalism, nothing irks me like veiled attacks masked as criticism, especially one that comes from an uninformed position. Criticism is an art, and what Animashaun did wasn’t it. More so, the fact that Punch Newspaper, a well-respected publication in Nigeria would okay such rubbish for publishing shocks me. First, I would like to clear one central misconception that the writer has about monopolies. In itself, monopolies are not necessarily bad as long as the dominant firm does not abuse its position by engaging in anti-competitive behaviours like creating barriers to entry for potential players in the market. You only really need a surface understanding of economics to grasp this much.
Secondly, on the issue of Dangote’s potential monopoly in the business of petrol refining, I’d argue that it’s more of a blessing than a curse. With Nigeria’s crude oil wealth, it’s baffling that the country doesn’t stand as a refining giant on the continent of Africa talk less of the world. The business of petroleum refining, which is capital intensive has for the longest time been run solely by the Nigerian government which has a history of corruption and mismanagement. The country’s three refineries in Kaduna, Port Harcourt and Warri have seen billions of dollars sunk into making them operational, yet Nigeria has been unable to refine enough crude oil for domestic use talk less for export.
Nevertheless, with Dangote’s move into the petrol refining industry, a renaissance similar to that which came with Nigeria’s liberalization of the telecoms industry in 1999 is expected to grace the refinery industry as private capital flows in. Historically speaking, the 1999 round of liberalization dealt the death blow to NITEL, Nigerian Telecommunications Limited as more efficient private, profit-seeking firms like MTN and then Econet gained license to participate. At the risk of repetition, the Nigerian government’s history of corruption and mismanagement is the easy culprit for this phenomenon. Yet, the hope is that Dangote is first among private entrants in the refinery industry especially as modular refineries provide an alternative to potential industry players who may not have as much capital as Dangote.
On the point that Dangote would be selling his product, refined petrol in dollars — all Animashaun has against the capitalist is a moral argument and a weak one at that. In Dangote’s defence, I would like to ask Animashaun — in what currency do you think Dangote paid for the imported fabricated parts of his factory and the workforce of expatriates who helped hack it together in Lagos? In case it wasn’t obvious, the price tag of the factory was in dollars — about 19 billion of it, and every business man knows that dollars is the currency of international trade. It’s only fair that the man recoups his investments. The fact that Dangote’s refinery would cut out the shipping costs that would have otherwise inflated the price of petrol products in Nigeria is Christmas enough for Nigerians. Alternatively, Animashaun should focus his activism on the government which can, as a public good buy in dollars and sell in naira.
Lastly, Animashaun’s inference that Nigeria lacks the legal framework to regulate monopolies and anti-competitive practices is not only wrong but ignorant. The Buhari-led administration passed the Federal Competition and Consumer Protection Act into law in 2019. The Act established the Federal Competition and Consumer Protection Commission which has the overarching mandates of ensuring healthy competition in Nigerian markets and protecting consumer interests.
