The Unfolding Crisis in Nigeria’s Oil Market: A Deep Dive into Dangote’s Concerns

In a candid discussion that has sent ripples through Nigeria’s oil sector, Aliko Dangote, a titan in the industry, has pointedly criticized the nation’s port infrastructure and the financial burdens faced by local oil marketers. He revealed a startling reality: it is now more cost-efficient for marketers to obtain refined petroleum products from offshore depots in neighboring countries, such as Togo, than to source them from the Lekki-based Dangote refinery. This raises a critical question: how did we reach a point where buying locally is more expensive than importing?

Addressing attendees at the recent Global Commodity Insights Conference, which shone a spotlight on West Africa’s refined fuel market, Dangote pinpointed a myriad of economic inefficiencies that plague the local market. He denounced a complex web of port-related fees and regulatory hurdles that local merchants must navigate, a distressing burden that grows heavier with each passing day.

This conference, proudly co-hosted by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and S&P Global Commodity Insights in Abuja, provided a substantial platform for critical dialogue. It was here that Dangote stressed that the fees incurred at the loading point of the refinery and at domestic discharge terminals are crippling. Interestingly, these fees are significantly lower or entirely absent for those importing gasoline from international facilities, such as the Lomé Floating Storage Terminal in Togo. One has to wonder: how can a nation aspire to self-sufficiency if its own systems act as deterrents?

Insights from Dangote

“In terms of port charges, it is currently more expensive to load a domestic cargo of petroleum products from the Dangote Refinery,” Dangote emphasized, pointing out the double charges incurred—both at loading and discharge for local marketers. “But when they load from Lomé, which competes with us, they pay only at the point of discharge. This is simply unfair and unsustainable.”

This stark contrast raises another pertinent question: is it feasible to expect growth and innovation when the playing field is so skewed?

Reports from Punch highlight not only Dangote’s frustrations but also those of marketers compelled to absorb these additional charges. Reiterating this sentiment, Chinedu Ukadike, the National Publicity Secretary for the Independent Petroleum Marketers Association of Nigeria, explained, “We don’t load in Lomé, but for Nigerian distribution through the coastal route, it is easier to use the vessels here in Nigeria because it is interstate.” He elaborated that local market players often circumvent numerous charges by choosing domestically sourced products over imports.

“It is better to load from Dangote via both means,” he added, noting that the logistics involved in importing from another country pose significant challenges compared to loading from within Nigeria. Yet, one must question: what obstacles can be reformed to optimize local transactions?

Voices from the Ground: Broader Implications

However, not everyone shares a unified viewpoint. Some industry participants assert that the very methods through which the Dangote refinery operates restrict rather than enable efficient supply. This point was emphasized by Olufemi Adewole, Executive Secretary of DAPPMAN, who voiced concerns that the current approach does not benefit many local marketers, particularly small businesses that heavily depend on adaptable coastal supply chains.

“Since the advent of Dangote refinery, it has not been smooth sailing at all,” Adewole lamented. Reflecting on preliminary negotiations with Dangote’s management, he expressed cautious hope. “We received promises and assurances that we would be accommodated. We are ready and still willing to patronize Dangote.” However, he struck a chord of skepticism: “But the issue is, is Dangote ready to give us the product we want?”

Adewole elaborated on the transactional process, noting that prices are not disclosed upfront. “It is only after you’ve been cleared that a proforma invoice is issued. Meanwhile, there appears to be a select group that Dangote prefers to trade with,” he said, revealing a palpable concern for transparency and equitable access in dealings.

Adding another layer to the discourse, Clement Isong, Executive Secretary of the Major Energy Marketers Association of Nigeria, called for a regulatory balance to ensure that monopolistic practices do not take root. This begs the question: what steps should be taken to foster fair competition and stimulate genuine market growth?

As stakeholders continue to grapple with these complex issues, the discussions at the Global Commodity Insights Conference have illuminated a critical crossroads in Nigeria’s oil market. Will reforms pave the way for a thriving local industry, or will these obstacles linger to stifle growth? What is abundantly clear is that the conversation has only just begun. As we move forward, many eyes will be watching—hoping for a future where local sourcing not only matches but exceeds the convenience and cost-effectiveness of international alternatives.