“How Many Investors Can Build Refineries”? – Akinwumi Adesina Backs Dangote Amid Faceoff With NNPC

“How many investors can build refineries”? — Akinwumi Adesina backs Dangote amid faceoff with NNPC

By Aremu Adebayo

Akinwunmi Adesina, president of the African Development Bank (AfDB), has criticised the “monopoly” accusations against Aliko Dangote, chairman of Dangote Industries Limited (DIL).

Adesina spoke in an X post shared by Femi Otedola on Tuesday.

On July 20, Dangote said the board of directors agreed that the company should halt plans to invest in Nigeria’s steel industry “to prevent accusations of being branded a monopoly”.

Prior to this, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) claimed that refineries in the country — including the Dangote refinery — produce inferior petroleum products.

The regulator also accused Dangote of monopoly — triggering a heated dispute between Africa’s richest man and Nigeria’s oil sector regulators.

As the conflict heightened, Dangote offered to sell his oil refinery to the Nigerian National Petroleum Company (NNPC) Limited on July 22.

Reacting to the development, Adesina defended the billionaire saying “Dangote refineries surely cannot be asked to compete with importers”.

“Monopoly often exists where there are high barriers to entry or high capital costs,” he said.

“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.

“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.”

Adesina also said importers set up local refineries and compete by refining in Nigeria.

“That is fair and justified competition,” he added.

“We cannot and must not undermine, disparage or kill local industries, talk less of one that is of this scale — a jewel of industrialisation 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.”

On July 22, the house of representatives joint committee on petroleum resources (downstream and midstream) launched a probe into claims that local refineries produce inferior products.