Dangote’s masterstroke, By Wole Olaoye

You perch on my overburdened back while assuring me that you would do anything to lighten my distress —   except getting off my back! That is the assurance that Nigeria’s petroleum middlemen keep giving Nigerians in their bid to cement their parasitic perch between petroleum products and the consumers. 

For decades they have played the vile game in cahoots with corrupt government regulators. In the era of total dependence on imported petrol, everything was decidedly wooly. So, the public could not hold them down to specifics on quality, volume, value of subsidy, etc. They smiled to the bank while the public cursed their stars.

Street Wisdom

One would have thought that they would come to their senses and temper their greed with street wisdom when petroleum subsidy was removed by the government. Mildly put, Nigerians have been finding it difficult to cope with the new regime of subsidy removal. To ease the pains, the government embarked on some measures including the introduction of Compressed  Natural Gas, CNG, as a cheaper alternative for vehicles, especially commercial vehicles and heavy trucks used in petroleum distribution. 

You would expect that depot owners and marketers who had been making a killing all along had the interest of the people at heart, and that they would quickly convert their vehicles to CNG to reduce the final pump price of the product. But, no! They continued using their old fleet of diesel powered vehicles thereby incurring high transportation costs which were passed on to the final consumer. Still, they insisted on determining the price at which the new Dangote refinery would sell to them. 

The meaning of the scandalous state of affairs we have been witnessing in the last few months is that whereas Dangote invested about $20 billion in a world class refinery and produces high grade petrol to meet international standards, entrenched middlemen overpricing storage facilities and using diesel powered trucks, waylaid the benefits that could have accrued to overburdened consumers. When consumers protested that the price was getting insanely high, the depot owners and marketers blamed Dangote and requested that the refinery look into its pricing. At a stage, with the backing of elements within NNPCL, their song was that Dangote was angling to be a monopoly! 

With friends like depot owners, the Nigerian masses don’t need to shop for enemies. Oh God, save us from our friends; we can take care of our enemies!

NNPC Imports

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One of the most treacherous developments was the resort of government-owned NNPCL and some of its accomplices to importing foreign petroleum products under the guise of preventing a monopoly on the local scene. In order to beat Dangote’s price, they resorted to bringing in sub-standard products. Consumers became suspicious when they noticed remarkable differences between Dangote’s petrol and the imported cargo. 

And people asked: How do you compare the sub-standard cargo you imported with Dangote’s Euro-5 premium grade? The sulphur content of Dangote’s product is a maximum of 10 parts per million to reduce environmental impacts and a high-octane level for smooth burning in the engine. According to experts, the higher an octane number, the more stable the fuel. 

In the midst of all the scandalous attempts to frustrate Dangote, a video surfaced online comparing the burn rate of the petrol produced by the Dangote Refinery and the imported batch from the NNPC. According to the citizen-investigator, he poured each sample of Dangote petrol and imported fuel respectively into separate power generators and the one running on NNPC fuel stopped after 17 minutes while the Dangote petrol lasted 30 minutes.

It is not surprising today to see long queues of vehicles at the petrol stations of a particular branded outlet which retails fuel from the Dangote refinery while other stations retailing imported petrol beg for customers. 

Prospective investors in the big manufacturing sector were made to wonder if this quasi-ambush was Nigeria’s standard way of treating investors. If a Dangote with his wide connections could be pushed to the precipice of frustration, what should rank outsiders expect? If gold could be threatened with rust so brazenly by entrenched cartels of middlemen and bureaucrats, what could mere iron in the shape of an unknown Tamuno, Dike or Hadi reasonably expect?

Every government worthy of the name protects industries within its borders. No sensible government goes out of its way to create foreign competition for its local industry under the guise of preventing monopoly. The correct way to challenge Dangote refinery is to establish another facility locally, not through importation of foreign fuel with scarce foreign exchange which only goes to provide employment for foreigners. 

Masterstroke

But here is the news: From 15 August, Dangote’s new delivery policy involving a fleet of 4,000 CNG-powered trucks will start delivering the refinery’s products directly to petrol stations, industrial firms, and other large consumers. This plan cuts out traditional depot owners, import-dependent marketers, truckers, and petrol tanker operators.

The policy entails free delivery and generous credit facilities for large volume purchases, adding incentives for a more flexible and cost-effective delivery process. The new system is expected to benefit marketers, rural filling stations, and large industrial users.

Independent petroleum marketers have suffered supply bottlenecks and exorbitant depot charges for many years. Dangote’s direct distribution model bypasses these hurdles and, for a change, enables underserved rural areas to access products at competitive rates. Dangote’s plan of deploying smaller, more efficient trucks to reach remote locations gives full meaning to the concept of Government-Industry partnership, totally at variance with the thinking of entrenched interests whose only concern is rent-hiking or economic ambush.

When Dangote starts supplying directly to retailers, depot owners who relied entirely on charging exorbitant storage fees will have to change their business model or go out of business. It had been very profitable while it lasted, but now the party is over. As they say in Warri, “Ojoro Cancel!”

To sustain and even enhance the relief that the new Dangote distribution policy will bring to Nigerians, the federal government should ensure that all local refineries — Dangote and all the modular refineries — have regular supple of crude oil purchased in Naira to satisfy local consumption. It is a bleeding shame that some of our refineries have to buy crude oil from foreign suppliers in USD. 

My advice to the Nigerian government: Ramp up crude oil production with a target of 3 million through a combination of measures — encouraging the drilling of new wells, destroying the infrastructure of oil thieves and fighting corruption in the system with the use of technology. If our local refineries buy crude oil locally and pay in Naira, then the government’s stated desire to drastically reduce the pump price of petroleum products may materialise.

Meanwhile, kudos to Dangote. Any measure that has the promise of alleviating the petro-burden of Nigerians has my full marks.

Congrats, Colonel Umar Dangiwa (Rtd)

All hail the latest recipient of the national honour of Commander of the Order of the Federal Republic (CFR), the remarkable Col Abubakar Umar Dangiwa (Rtd).The much awaited award was  officially confirmed by the President Tinubu in Kaduna last week. Now, those of us who have admired him over the years and campaigned that his unimpeachable heroism be acknowledged and honoured, can proudly add the name of this officer and gentleman to the pantheon of role models for our children. It is good to live for something.

Congratulations, worthy compatriot!

Wole Olaoye is a Public Relations consultant and veteran journalist. He can be reached on [email protected], Twitter: @wole_olaoye; Instagram: woleola2021