Written By Dr. Oluwaseun Adeoye Oyebamiji
The sage George Ayittey spent much of his career warning about Africa’s “Hippos”, the entrenched elites who get fat on state patronage and monopoly, versus the “Cheetahs”, the young entrepreneurs who just want government out of their way so they can build something.
The news that Dangote Petroleum Refinery is preparing to halt PMS sales to Matrix, A.A. Rano and the other five licensed importers is a good moment to ask which one Nigeria’s most celebrated refinery is becoming.
The refinery’s complaint has some substance. Imported petrol made up about 43 per cent of supply in July, despite a $19 billion plant built in Lagos specifically to end Nigeria’s habit of exporting crude and importing the fuel refined from it elsewhere.
Dangote is worried that imported cargoes of inconsistent quality could get blended with its own product before reaching consumers, making it hard to trace bad fuel back to its source. It also says the regulator, NMDPRA, does not have the lab capacity to independently verify that imported fuel meets specification.
Those are real concerns.
But the question a free-market view has to ask is why one private company gets to decide, on its own, who else is allowed to sell petrol to Nigerians.
Nigeria never really built a competitive fuel market. It replaced the old NNPC import-and-subsidy system with a structure where a single private refiner is now large enough to set terms for the entire downstream sector.
The six licensed importers exist because NMDPRA tried to preserve some supply diversity and price discipline by keeping the door open to foreign cargoes. Dangote’s response is not to win on price and quality. It is to use its market weight to close that door.
If the refinery truly had a cost advantage, it could undercut the importers on price and let consumers walk away from them on their own.
Cutting off supply instead of competing on price is a tell.
Ayittey was clear that a monopoly is a monopoly whether it is run by the state or by a billionaire. A market with one dominant seller that can cut off supply to smaller rivals does not become free just because government did not order the cutoff.
If Dangote can simply refuse to sell wholesale product to the licensed marketers, those marketers become fully dependent on foreign cargoes at higher landed cost, and that cost gets passed straight to pump prices for ordinary Nigerians who have no say in this dispute.
Dangote does deserve one piece of credit that should not get lost in this argument. Nobody else was willing to put $19 billion into Nigerian refining after decades of a state sector that ran the business into the ground.
Taking on that risk, and expecting the rules not to shift under him once the plant was built, is not an unreasonable position. A country that wants private capital to fix its infrastructure problems has to honour the terms investors built under, or it will struggle to attract the next $19 billion from anyone.
The two things can both be true.
Dangote earned a stable set of rules to operate under. He did not earn the right to write those rules himself by cutting off rivals whenever he judges the mix of supply to be inconvenient.
The actual fix has to come from government, not from either side unilaterally deciding what is fair.
NMDPRA should set a clear tariff on imported PMS, low enough to keep supply diverse but high enough to reflect that Dangote carried the capital risk domestic refining required. At the same time, Dangote should be required to sell wholesale product to all licensed marketers at a transparent, published ex-depot price, the same price for everyone, so nobody can quietly starve out a competitor.
Combine that with faster licensing for new refiners and a properly funded quality lab at NMDPRA, and the market gets both fair treatment for the operator who took the risk and real protection for consumers.
The broader pattern here is one Nigeria has lived through before.
State monopoly gives way to private monopoly, and the public is told each time that this new arrangement is the fix.
The real problem was never who owned the monopoly. It was the absence of open, rules-based competition.
Nigerians spent decades demanding an end to fuel queues caused by a broken state system. They should not have to settle for queuing behind one billionaire’s terms instead, whether he built the plant with his own risk capital or not.
Dr. Oluwaseun Adeoye Oyebamiji is a development economist and agricultural policy researcher whose work examines food security, poverty, markets, agricultural policy and economic development, particularly in Africa. His research combines empirical evidence with policy analysis to examine contemporary economic and development issues.