There is a common saying that a lie may travel swiftly but the truth will ultimately catch up with it. The average Nigerian is beginning to discern through Dangote’s web of deceit and tissue of lies, which includes his spurious claims and baseless accusations against industry regulators and other actors in the Nigerian oil industry.
Interestingly, NNPC Ltd did not have to react or fight back despite possessing all the necessary evidence. Alhaji Dangote has failed to recognise the economic potential, profundity and reach of an industry that has sustained Nigeria’s economic growth for five decades.
A complex relationship is established involving the International Oil Companies (IOC), NNPC Ltd, local Joint Venture partners, transportation agents and companies, downstream companies, and petrol stations, which is based on trust, mutual understanding, business relationships, and market understanding. In an industry where the consumer is truly king, you will have to add value to be valuable.
Mr. Dangote has demonstrated a rather superficial comprehension of the web of intricate relationships that connect the crude oil wells across the world to the dispensing pumps at the various filling stations, despite his large-scale involvement in a segment of a vast international supply value-chain.
In a manner similar to his strategy for the other industries in which he has dominated in Nigeria, Alhaji Dangote has chosen to bully his way through, expecting that everyone will give in in order for him to flourish. However, this is the oil industry, and relationships are as valuable as money in the treasury.
Lying about the availability of products while pushing for NNPC to become his exclusive vendor is indicative of hypocrisy. If he has an amount comparable to the 500 million litres in storage, allow him to sell them to the international market.
Given that his refinery is already situated in a FZE, it would at least generate the necessary foreign exchange for Nigeria. He was compensating for the forex loss resulting from the Naira crude oil price. Except that he was only bluffing.
As I write this, I have in front of me a press release from Pinnacle Oil and Gas (FZE), Dangote Refinery’s next-door neighbor. In a press release from 3rd November 2024, DR alleged that an international trading company had recently hired a depot facility next to the Dangote Refinery, with the intention of blending substandard products to compete with Dangote Refinery’s higher quality products. Although the Dangote Group had previously made deceptive and erroneous statements about rivals, their recent spate of press releases and media appearances following the Dangote Refinery’s streaming have demonstrated a growing desperation and a disturbing lack of rationality.
From falsely accusing NNPC, Alhaji Dangote’s attempt to establish a monopoly, disregarding the open market policies of the 2021 PIA and not being transparent about his product prices, has already become a farce.
In its press release rebuttal, Pinnacle Oil succinctly stated, “Deregulated commodity markets work best with an open system of multiple sellers and multiple buyers bidding to establish the market price.” Nigeria should have access to a range of supply options, such as local refineries or imports, in order to determine the most competitive and sustainable prices. Regulating a free market also guarantees that all products adhere to the nation’s standards and all participants act responsibly.
Between the Dangote Press release maligning competitors to his new business and the masterclass response given in the first paragraph of the Pinnacle Oil and Gas FZE response, there’s a lot to unpack and chew on. Let’s get started.
The key to understanding and thriving in the energy industry is to understand that everyone is a price taker. No one, not even with a 650k bopd refinery, is big enough to affect global prices. If you adopt a strategy of manipulating prices through unscrupulous methods, not only will you face resistance, but it will also lead your potential clients to seek out more affordable suppliers.
For example, Pinnacle Oil is currently the largest private depot in the Lekki axis, capable of loading over 100 trucks daily. If DR establishes a mutually beneficial pipeline connection with Pinnacle, he will discover that a positive approach yields more benefits than a negative one. He can use the same method to reach out to NNPC and connect his product to both Mosimi and Atlas Cove.
However, he must be prepared to drop his arrogance and consider lower margins and beneficial long-term relationships instead of the acrimonious approach he has been displaying. If his prices are competitive, importation will not be any marketer’s first choice.
● Lemsworth, a market research analyst, writes in from Lagos.
