By Mahmud Shuaibu Ringim
Investigative journalist David Hundeyin, based in the UK, recently exposed a startling revelation about an attempt to sabotage the Dangote Refinery. According to Hundai, a highly connected NGO approached him, asking him to write a damaging critique of the refinery. The NGO, as part of a broader campaign, was attempting to mobilize journalists to criticize the refinery, linking it to climate change and environmental degradation. They provided him with a pre-written draft, asking him to sign his name to it in order to lend it credibility in the media, given his influence.
However, Hundeyin driven by a sense of patriotism and concern for Nigeria and Africa, declined the offer. Instead, he exposed the plot, thereby thwarting a potentially damaging attack on the Dangote Refinery. This revelation sheds light on a larger international effort to stifle fossil fuel development in favor of renewable energy, which has placed the Dangote Refinery in a precarious position.
The Global Push for Renewable Energy
The Samoa Agreement, which advocates for sustainable development in response to climate change, has become a rallying point for international pressure against the fossil fuel industry. At the World Economic Forum, BlackRock and other global financial players have aggressively pushed for Environmental, Social, and Governance (ESG) initiatives, emphasizing the need to replace fossil fuels with renewable energy sources. Similarly, the Biden administration’s Inflation Reduction Act aims to strong-arm countries dependent on fossil fuels by limiting their access to the U.S. dollar in international payment systems unless they transition to renewable energy.
Despite all these noise about renewable energy, Fossil Fuels is still the major energy source, comprising 81% of Global energy mix in 2023 and is expected to remain so for a very long time according to Global Energy Mix Report. In 2024 there are 824 refineries in the world and are expected to increase by 181 by 2020
Similarly, it is interesting to know that Coal, the world acclaimed environmental pollutant, is currently the most abundant source of electricity world wide providing 36% of global electricity. Coal-fueled power plants account for nearly one quarter of the electricity in the United States
These global campaign against fossil fuel sourcing of energy pose a significant threat to Dangote Refinery, placing it at the center of a storm created by international interests determined to end the dominance of fossil fuels. This is reminiscent of the fate of the asbestos industry in the late 20th century, which faced similar pressure. The multinational Etex Group, with its factories in Nigeria, successfully lobbied for the transition away from asbestos to new technologies, forcing the Nigerian industry to adapt or face extinction.
Monopolistic Competition and Domestic Challenges
While international players work to cripple the Dangote Refinery, local forces are also at play. Monopolistic competition within Nigeria’s energy sector, spearheaded by certain local collaborators, is aiming to undermine the refinery’s success. These actors want to curtail the refinery’s growth and dominance, fearing that it could disrupt existing supply chains and monopolies within the country.
Despite this, the Nigerian National Petroleum Corporation (NNPC) owns a 20% stake in Dangote Refinery, providing a degree of protection against attacks from within. NNPC’s involvement in the project from its inception, coupled with its seat on the Board of Directors, gives it a vested interest in ensuring the refinery’s success. The Group Managing Director of NNPC, during the commissioning of the refinery by former President Muhammadu Buhari, delivered a supportive speech, underscoring NNPC’s commitment to the project. Additionally, former Central Bank of Nigeria (CBN) Governor Godwin Emefiele highlighted the critical support provided by the CBN to ensure the refinery’s success.
Global Competition and Domestic Impact
The Organization of Petroleum Exporting Countries (OPEC) has acknowledged that the Dangote Refinery has the potential to disrupt the existing global supply chain for petroleum products, particularly in Europe. This disruption is likely to ruffle the feathers of entrenched global oil giants like Shell, ELP, and Total, who have significant influence in the global market. Aliko Dangote himself has alluded to the oil industry’s power, describing the “oil mafia” as more vicious than even the drug trade.
Domestically, recent developments indicate that NNPC, under the guidance of President Bola Ahmed Tinubu, has agreed to sell crude oil to domestic refineries in Naira. This move signals a shift in strategy to support the success of local refineries like Dangote’s. The refinery is crucial to Nigeria’s broader economic goals, particularly in the context of the removal of fuel subsidies, which is expected to boost government revenue. Additionally, the refinery could reduce pressure on the Naira by lowering Nigeria’s demand for U.S. dollars by 40%, improving the country’s balance of payments and bolstering its foreign reserves.
The impact on consumers could also be significant. A reduction in fuel prices, driven by the Dangote Refinery, could lower transportation costs, reduce food prices, and alleviate some of the economic hardships faced by Nigerians.
Navigating Domestic Sabotage
However, the Independent Petroleum Marketers Association of Nigeria (IPMAN) is reportedly rolling up its sleeves to sabotage the government’s efforts to reduce fuel prices. IPMAN has presented a pricing template to Dangote Refinery in an attempt to control the pricing of Premium Motor Spirit (PMS). Their concern stems from the recent drop in the price of diesel from N1,800 to N980 per liter, which has likely impacted their profits.
Despite this, it would be prudent for Dangote Refinery to resist the pressure from IPMAN and instead sell PMS at a rate that benefits Nigerian consumers. IPMAN’s resistance to the refinery’s success likely stems from the fact that it has disrupted their control over the importation and distribution of refined petroleum products, which previously allowed them to profit from exchange rate discrepancies.
A Strategic Approach to Success
To navigate these challenges, Dangote Refinery should develop a robust downstream marketing strategy. This includes carefully selecting distributors and establishing mega station outlets similar to those of NNPC. A competitive market environment, where consumers have the option to choose between Dangote and NNPC products, will foster greater customer satisfaction and ultimately benefit Nigerians.
The Dangote Refinery must steer carefully through the turbulent waters created by both international and domestic players. Its success will have far-reaching implications for Nigeria, not only in terms of economic growth and foreign exchange earnings but also in alleviating the burden on consumers. As a trailblazer, Dangote Refinery has the potential to shift Nigeria from a dependence on imported petroleum products to a position of strength as an exporter.
The challenges are immense, but with careful navigation, Dangote Refinery can reach the shore safely, becoming a beacon of hope for Nigeria’s future in the global energy market.
Ringim is of HALIM Consulting Ltd
mahmudshuaibu44@gmail.com