Given Opportunity To Operate, Dangote Refinery Stands Chance Of Disrupting The Market As Done By Glo, Air Peace

BY ISAAC ASABOR

Aliko Dangote, Africa’s richest man, has made a staggering $20 billion investment in Nigeria’s largest refinery, the Dangote Refinery. The facility, which opened early last year, was expected to transform Nigeria’s fuel industry by eliminating expensive imports and providing affordable pump prices. However, disagreements with local regulators and oil companies have turned this ambitious project into a public spat.

The Refinery, which is designed to refine 650,000 barrels of oil per day, has the potential to meet all of Nigeria’s fuel needs when fully operational. But this is where the plot thickens. Aliko Dangote and his team accuse international oil producers of selling locally produced crude to the refinery at above-market prices. Meanwhile, Nigerian regulators claim Dangote wants a monopoly on refined oil products.

To assess the potential impact of the Dangote Refinery, consider two other disruptors: Glo (a telecommunications company) and Air Peace (an airline). Both companies disrupted their respective markets by challenging established players and providing innovative solutions.

It should be noted in this context that Glo’s entry into the Nigerian telecom market disrupted the status quo, which was dominated by MTN and Airtel. Glo’s aggressive pricing, extensive network coverage, and data-driven strategy compelled competitors to adapt or lose market share. Similarly, the Dangote Refinery aims to challenge the current fuel import model.

In a similar vein, Air Peace has recently disrupted the aviation industry by offering low-cost domestic flights and expanding routes. Air Peace’s emergence resulted in increased competition, improved services, and lower fares. Similarly, the Dangote Refinery could reduce fuel prices, benefiting both consumers and businesses.

Dangote’s $100 million investment in land for the refinery demonstrates his commitment. However, clashes with the authorities have caused uncertainty. Heineken Lokpobiri, Minister of State, recognises the challenges and emphasises the need for a solution. Lawmakers have even called for the regulator’s suspension, accusing Dangote of monopolistic intent.

Traders and shipping data show that the Dangote Refinery is increasing fuel exports to West Africa, potentially taking market share from European refineries. According to analysts, rising fuel production threatens to close approximately 400,000 barrels of European refining capacity per day.

Without a doubt, Dangote Refinery is at a crossroads. If allowed to operate smoothly, it has the potential to disrupt the market in the same way that Glo and Air Peace did in their respective domains. However, resolving regulatory issues and promoting cooperation are critical to its success. As Nigeria watches, the fate of this mega-refinery is in the balance.

An African proverb states, “When the pounded yam is not eaten because of the poorly cooked soup, it should be eaten because it is well pounded.” In the context of the Dangote Refinery, this ancient proverb serves as a reminder to prioritise the greater good. Regardless of any ill-conceived shortcomings or controversies surrounding Alhaji Aliko Dangote as a person, we must acknowledge the immense potential of this refinery for Nigeria, especially given its promise to end Nigeria’s reliance on costly fuel imports. Imagine Nigeria in which fuel scarcity is a distant memory and energy security is a reality.

Without a doubt, the refinery will generate jobs, stimulate local businesses, and significantly boost the nation’s GDP. It is an opportunity for prosperity that transcends personal preferences. When operating at full capacity, the refinery can produce enough oil to meet Nigeria’s needs and even generate an export surplus. This technological breakthrough will undoubtedly benefit all Nigerians.

Similarly, lower fuel prices result in lower transportation costs, which have a knock-on effect throughout the economy. Families, farmers, and entrepreneurs will all benefit equally.

Let us not be distracted by our personal biases. Instead, let us celebrate the well-pounded yam, the Dangote Refinery, and all the benefits it provides to our country.

Without using hyperbole, it is appropriate in this context to emphasise the significant funds spent on Nigeria’s existing refineries and why the Dangote Refinery deserves a chance.

Without sounding unpatriotic, Nigeria, Africa’s largest oil producer, has for decades struggled with underperforming refineries. Despite significant investments in reviving the undeniably dilapidated refineries, these facilities have failed to meet domestic fuel demand. Given the foregoing, many Nigerians see the Dangote Refinery as an important opportunity.

Even though Nigeria owns four government-controlled refineries, two in Port Harcourt, one in Warri, and one in Kaduna, with a total refining capacity of 445,000 barrels per day (bpd), they operate far below their full potential.

For example, between 2010 and 2020, the Nigerian National Petroleum Corporation (NNPC) spent a staggering $10.3 billion (approximately 4.8 trillion naira) to maintain these refineries, but despite this massive investment, they remain inefficient and unable to meet fuel demand.

Given the inherent futility of massive spending to revitalise Nigerian-owned refineries that have practically refused to work, there is no denying that the Dangote Refinery remains a game changer. This is due to Aliko Dangote’s $20 billion investment in the Dangote Refinery, which promises a different narrative. Its refining capacity of 650,000 bpd dwarfs that of the existing facilities. If allowed to become operational without being marred by controversy, the project has the potential to end Nigeria’s reliance on fuel imports and alleviate perennial queues at petrol stations.

Without a doubt, the Dangote Refinery aims to produce enough oil to meet Nigeria’s entire fuel demand. Imagine Nigeria in which fuel scarcity is a distant memory.

In a similar vein, given that job creation, local business stimulation, and GDP growth are all on the horizon as a result of the refinery’s smooth operation, it is not an exaggeration to say that its success will ripple through the economy and benefit all Nigerians. This is because lower fuel prices reduce transportation costs for families, farmers, and businesses, resulting in a win-win situation.

Since the establishment of Dangote Refineries became a point of contention, many experts and analysts have unanimously stated that the $26.5 billion spent on maintaining the existing refineries could have been used to build three new refineries of the same size; instead, these funds produced little output. Given the foregoing, many experts and commentators on the subject believe Aliko Dangote’s $20 billion investment in the Dangote Refinery is a bold move.

At this point, it is prudent to appeal to those who appear to be going to any length to ensure that Dangote Refinery does not succeed, rather than mischievously and jealously expressing their differences with the man behind the project.

The reason for filing an appeal in this case is understandable: the refinery represents hope, a chance to break free from the cycle of inefficiency. In fact, as Nigerians, we should seize this opportunity. Proverbially speaking, let us give the well-pounded yam a chance, even if the soup has not always been perfect.