AfDB Chief Defends Dangote in Oil Industry Dispute

Adesina weighs in on Dangote's side in regulatory battle...

AfDB President Akinwunmi Adesina defends Aliko Dangote against monopoly accusations, as Dangote offers to sell his oil refinery amid regulatory disputes and allegations of substandard products.

African Development Bank (AfDB) President Akinwunmi Adesina has come out in support of Aliko Dangote, Chairman of Dangote Industries Limited, amid accusations of monopolistic practices. Adesina shared his thoughts on the matter via a post by Femi Otedola on social media platform X on Tuesday, July 23.

Dangote Industries Limited had announced on July 20 that its board of directors has decided to put on hold its plans to invest in Nigeria's steel industry. This move was made to avoid being labeled a monopoly, following claims by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) that refineries in the country, including the Dangote refinery, produce substandard petroleum products.

The dispute between Dangote and Nigeria's oil sector regulators intensified when the regulator accused him of monopolistic practices, leading to a heated exchange between Africa's richest man and the regulatory authorities.

In an attempt to resolve the conflict, Dangote offered to sell his oil refinery to the Nigerian National Petroleum Company Limited (NNPCL) on July 22. However, AfDB President Akinwunmi Adesina weighed in on the matter, defending Dangote by arguing that his refineries should not be expected to compete with importers, highlighting the need for a level playing field.

“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 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?

“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 launched a probe into claims that domestic refineries, including Dangote's, are producing petroleum products that fail to meet quality standards.