The President of the African Development Bank (AfDB), Nigeria’s Akinwumi Adesina, on Tuesday waded into the ongoing public squabble between the President of Dangote Industries Limited (DIL), Alhaji Aliko Dangote, and the management of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
Expressing his opinion on the matter, Adesina described the whole issue as “shocking,” pointing out that it was creating bad waves for Nigeria globally.
He argued that those who accuse Dangote of having monopolistic tendencies should show evidence, stressing that there exist natural entry and exit encumbrances in certain businesses, including the huge initial capital outlay needed for such ventures.
Adesina explained that having imported its fuels for decades, the situation had become almost normal for Nigeria, positing that the mentality that Nigeria should simply import what it needs will not help the economy.
“Monopoly often exists where there are high barriers to entry or high capital costs,” Adesina contended. He added, “How many individuals or companies can do railways? How many can do refineries of the scale of Dangote Refineries?”
“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 rationalized and chorused to solve any problem,” he maintained.
According to him, while competition is good, the Dangote refinery cannot be asked to start contending business-wise with importers of the product, a situation that he said will lead to unfair competition.
“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? But 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,” he added.
Adesina argued that Nigeria cannot afford to belittle the huge investment in the Dangote refinery, urging the authorities to protect the oil asset for the benefit of Nigerians.
“We cannot and must not undermine, disparage, or kill local industries, talk less of one that is of this scale — a jewel of industrialization 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, maximizing forward and backward linkages in the local economy, job creation, reducing forex expenses, and shoring up the Naira.
“We must not be myopic. 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?
“Investing is tough. Pettiness is easy. It sadly sends a signal that the price for sacrificing for Nigeria is to get sacrificed,” he posited.
Aside from the fight to get International Oil Companies (IOCs) to supply him crude oil at normal prices, Dangote had recently clashed with the industry regulator, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) over the quality of products from his oil refinery in Lagos.
While the NMDPRA said the diesel and jet fuel supplied by the refinery were subpar, the management of the company had recently moved to show that the quality of its fuels was far better than those imported by the Nigerian National Petroleum Company Limited (NNPC).
Dangote contends that his fuels have less than 78ppm, that is the amount of sulfur in the products, and would hit as low as 10ppm by August this year, insisting that the imputation that his fuels were substandard was baseless.
