Supporting Dangote Refinery: A Path to Nigeria's Economic Growth

The ongoing clash between the Nigerian government and the Dangote Group over the operations of the Dangote Refinery is a matter of significant economic concern. As a petroleum economist, I believe this situation needs a balanced and pragmatic approach.

 The Dangote Refinery, one of the largest in the world, represents a massive investment in Nigeria's economy. It has the potential to transform our economic landscape by refining local crude oil, creating thousands of jobs, increasing exports, boosting GDP, and providing cheaper petroleum products for Nigerians. This is not just an economic boost but a step towards energy security and self-sufficiency.

 The Dangote Refinery's request to have all marketers source their petroleum products from its Refinery is a practical idea. It would reduce our dependency on imported fuel, save foreign exchange, and ensure a steady supply of affordable petroleum products. However, the government's refusal, citing reasons such as the refinery being at the pre-commissioning stage, fears of monopoly, and concerns over product quality, needs to be re-evaluated.

First, while it's true that relying heavily on one refinery might pose risks, it's also important to recognize the urgent need to support such significant domestic investments. The government can introduce measures to ensure quality and fair competition without stifling the Dangote Refinery's operations.

The government's claims of inferior quality of Dangote refined petroleum products compared to imports need thorough analysis. Even if that is true, Dangote should not be blamed for that because if the Nigerian Government could sell its high-quality crude oil to Dangote Refinery, it could produce cleaner products. But now, Dangote has to look for any crude grade available on the market anywhere in the world.

Right now, Nigeria desperately needs affordable fuel to breathe life back into the economy. Cleaner alternatives can be a future goal after economic stability is achieved.

Second, fears of monopoly can be mitigated by encouraging other investors to enter the market and reviving government-owned refineries. This would not only increase competition but also strengthen our refining capacity. The Dangote Group’s investments should be seen as a stepping stone towards attracting more investors into the sector. Dangote never intended to monopolize the industry because he met other refineries in the country, so the ground is level for every player. One can't help but wonder if those profiting from fuel imports are hindering the Dangote Refinery's progress to safeguard their current business model.

It is disheartening to see that Dangote Group has decided to suspend its new investments in the steel sector due to this crisis and regulatory hurdles. This is a significant loss for Nigeria. Such investments are crucial for industrial diversification, job creation, and economic growth. We must avoid creating an environment where investors feel discouraged. Instead, we should be fostering a climate that supports and rewards their commitment to Nigeria.

If other potential investors see how Dangote is being treated, they will also suspend or transfer their investments to a more friendly and safer country. Dangote has done so much for the Nigerian economy; he deserves all necessary support.

In conclusion, supporting the Dangote Refinery is not just about helping one company; it's about recognizing and leveraging a substantial investment that can drive Nigeria’s economic growth. The government should work collaboratively with the Dangote Group to ensure the refinery's success while also encouraging other investors to join the market. This balanced approach can lead to a more robust, self-sufficient, and prosperous Nigerian economy.

 Assoc. Prof. Ahmed Adamu

Petroleum Economist
ahmadadamu1@gmail.com