Standoff between Africa’s richest man and Nigerian government over crude oil
Africa’s richest man Aliko Dangote whose home nation is Nigeria is caught in a near standoff with his government over claims of his attempt to monopolise the oil industry with West Africa’s largest oil refinery, Dangote Refinery.
The Dangote Refinery, spanning nearly 4,000 football fields, began construction in 2016 in the Lekki Free Zone outside Lagos, Nigeria. It opened in May 2023 and, once fully operational, is expected to produce at least 650,000 barrels per day.
Dangote, whose ambition has been to venture and explore the oil and gas industry in Africa has had his project embroiled in an impasse with regulators over allegations Dangote is trying to monopolise the market for refined products.
Government’s Position
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has accused Dangote of requesting a ban on diesel and aviation fuel imports to benefit his refinery, a move they argue would create a monopoly and compromise energy security.
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The NMDPRA has also raised concerns about the quality of diesel produced by the refinery, claiming it is inferior to imported diesel, which has a lower sulfur content of 50 ppm compared to the refinery's 650-1,200 ppm.
Chief Executive of NMDPRA, Farouk Ahmed stated that relying solely on Dangote’s refinery is not feasible for national energy security and market stability. He emphasised the need for competition and high-quality standards in the petroleum market.
“We cannot rely heavily on one refinery to feed the nation, because Dangote is requesting that we should suspend or stop importation of all petroleum products, especially AGO and direct all marketers to the refinery, that is not good for the nation in terms of energy security. And that is not good for the market, because of monopoly. In terms of quality, currently the AGO quality in terms of sulphur is the lowest as far as the West African requirement of 50 ppm is concerned. Dangote refinery and some modular refineries, like Waltersmith refinery and Aradel refinery, are producing between 650 to 1,200ppm. So, in terms of quality, their product is much more inferior to the imported quality,” he said.
Dangote’s Position
Dangote and his team have accused international oil producers of selling locally produced crude to the refinery at above-market prices.
They have also criticised the lack of government incentives, stating that the refinery did not receive any financial support from the Nigerian government and had to pay $100 million to acquire over 2,600 hectares of land.
In response to these challenges from the government’s side, Dangote has asserted that the diesel produced by his refinery is the best available in Nigeria. Tests conducted at the refinery showed diesel with 87 parts per million (ppm) of sulfur, compared to imported varieties that tested above 1,800 ppm. The refinery aims to reduce sulfur content to 10 ppm by the end of the month.
Reactions and Implications
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The Dangote Group’s Chief Strategy Officer, Aliyu Suleiman, has rebutted the government's claims, suggesting that statements made by the regulator could be perceived as representing the government's stance, thus complicating the situation.
“If the regulator himself is making that statement, it can be seen almost as a statement that has come from the government and that’s what makes this different,” said Suleiman.
The Dangote Refinery aims to meet Nigeria’s domestic demand for refined petroleum products and reduce dependence on imports.
