Dangote vs Federal Government – A Deep Dive into Economic Policies and Infrastructure Impacts

By Adelodun, a political activist.

The Federal Government of Nigeria and its leading industrialist, Aliko Dangote, have been embroiled in a series of contentious events in recent months that have sparked intense discussions about economic policies and their effects on the country’s infrastructure and consumer welfare.

The controversy sparked public interest after a Sahara Reporters story highlighted concerns voiced by Farouk Ahmed, Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). Ahmed attacked the uniformity and standardization of Dangote refinery goods, claiming that they were inferior to imported equivalents. Furthermore, he stated that the Dangote Refinery had yet to be licensed by the relevant body and was only 45% completed, far from being suitable for seamless operation.

Ahmed also mentioned the risks of relying largely on a single refinery for the nation’s gasoline needs. He revealed that Dangote had ordered that fuel imports, notably Automotive Gas Oil (AGO) and Dual Purpose Kerosene (DPK), be suspended, with all marketers directed to his refinery instead.

Dangote responded by defending his business operations and investments. He added that he had canceled previous intentions to participate in Nigeria’s steel sector to avoid monopoly accusations. Furthermore, he stated that he was willing to sell his refinery to the Nigerian National Petroleum Company Limited (NNPCL) to demonstrate that his investments were for national progress.

However, in order to understand the roots of this discussion, we must first go back. The initial conflict appears to have began when Dave Umahi, the then-Minister of Works, convinced President Bola Ahmed Tinubu that concrete roads were more durable and cost-effective than bitumen roads. At the time, a bag of cement cost between ₦3,500 to ₦4,500.

Following this recommendation, President Tinubu planned and budgeted for the Lagos-Calabar coastal highway project. Dangote and other cement manufacturers raised the price of cement to ₦10,000 a bag just before the project started, resulting in a more than 100% increase in just a few days.

President Tinubu swiftly called Dangote to Aso Rock, demanding an explanation for the unexpected price increase. Dangote blamed the increase on increasing demand, while Tinubu argued that all cement raw materials were locally supplied, and the price increase was unwarranted. He recommended a price review.

BUA Cement then revealed plans to sell cement for ₦5,000 per bag. However, allegations quickly surfaced that northern elders had persuaded BUA to cancel the price cut, accusing them of sabotaging Dangote. Despite multiple reports and counter-reports, cement costs have remained high, affecting government road project budgets and other sectors across the country.

Dangote is now pressing the Tinubu administration to stop importing refined fuel to boost domestic refineries, a request that has been met with resistance. This proposal for import suspension recalls Nigeria’s previous decision to suspend rice imports in order to increase domestic output. Despite good intentions, this program caused rice prices to jump from ₦10,000 to ₦70,000 per bag. Local producers blamed the spike on excessive demand.

If Dangote’s request for the halt of petroleum imports is approved, there is a reasonable concern that local refiners may follow suit, convening meetings to agree on price increases and abusing the situation to the harm of Nigerian consumers.

The question therefore arises: should Dangote demand a halt to refined oil imports, especially while he is earning from its exports? The solution is in striking a balance between supporting local industries and protecting against monopolistic activities while maintaining fair pricing for consumers.

As we manage these complex economic policies, it is critical that legislators, academics, and the younger generation have educated talks. We must lobby for policies that promote growth, ensure infrastructure development, and preserve consumer welfare, preventing a few big players from threatening the nation’s economy.