Big Dangote, not the small one
Dangote refinery is now exporting petroleum products to Saudi Arabia
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Let’s get into today’s edition:
Dangote is levelling up; Nigeria isn’t
The struggle is real for Nigerian businesses
The Big Deal
Dangote is levelling up; Nigeria isn’t
It’s Aliko Dangote’s world, and we’re just living in it. The wealthiest man in Africa has stayed in our faces since he decided to tap into that oil money through his refinery. Now, he’s taking that hustler energy to Saudi Arabia by exporting two cargoes of jet fuel to Saudi Aramco, the country’s national oil company.
On Tuesday, February 4, Dangote revealed that the refinery will start operating at a capacity of 650,000 barrels per day by mid-2025. At that point, Nigeria will officially have the largest single-train refinery in the world.
Why is this a big deal?
On paper, Dangote’s win is every Nigerian’s win, but in reality, it might not mean much for us because even though the refinery can now comfortably supply fuel to every Nigerian, petroleum marketers still heavily import fuel.
If the refinery continues on this trajectory, it could end Nigeria’s reliance on importation, strengthen the naira, reduce fuel costs, and make the country a net exporter of refined petroleum products.
But as we mentioned earlier, none of that matters because the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is still issuing import licenses to foreign suppliers. You might not know this, but even Dangote is struggling to understand the obsession with importation, so much so that he has decided to drag NMDPRA’s ass to court.
Dangote’s legal team is arguing that Nigeria doesn’t need to keep importing refined petroleum products when his refinery produces enough for local demand. He’s even demanding ₦100 billion in damages, claiming the government is breaking the rules of the Petroleum Industry Act (PIA), which states that import licenses should only be granted if there’s a proven shortfall in local supply.
Between October 1 and November 11 alone, Nigeria spent close to ₦3 trillion on fuel imports. Around the same period, Dangote was asking the government to patronize local refineries. This was also the same period when African countries like South Africa, Angola, and Namibia were jumping on the waitlist for Dangote’s fuel.
Nigerian National Petroleum Company Limited (NNPCL), which has also been dragged into the legal drama, is not having it. It has filed an objection, arguing that Dangote has no right to dictate when importation should stop. The lawyers representing the national oil company also claim that Dangote mistakenly sued the nonfunctioning Nigeria National Petroleum Corporation (NNPC) instead of the now-limited liability company, NNPCL. Even though Dangote’s team say this was a “spelling error”, it has kind of given NNPCL an advantage in this case.
The court will rule on this case on March 18, but given the drama that went down before he was allowed to start selling directly to oil marketers, we won’t be holding our breath.
The struggle is real for Nigerian businesses
We all sort of knew 2024 was a tough year for Nigerian businesses, but a new report from Mustard Insights, a Nigerian data company just confirmed it. According to the report, nearly half of business owners in Nigeria—43.7%, to be exact—had to downsize their workforce to survive the financial crisis.
If you noticed that your favourite Nigerian brands raised their prices, you’re accurate because 65% of businesses reviewed by Mustard Insights raised their prices. And you can’t exactly blame them because the inflation rate, which has been on the rise lately, raised the prices of everything from raw materials to operations.
Has it always been like this?
Mustard Insights did the homework for us by comparing how businesses coped from 2022 to 2024. The findings are crazy: while a lot of businesses saw a manageable increase in costs between 2022 and 2023, 2024 was a different animal. 80% of companies reported a rise in costs between 51% and 100%, with some even seeing costs increase by over 100%. Not one of the analyzed companies escaped a rise in operational cost of at least 50% last year.
Several Medium, Small, and Micro Enterprises (MSMEs) also reported a noticeable decrease in sales because their consumers had less money to spend in 2024.
In the same 2024, we were told that President Tinubu’s reforms had started paying off but who exactly is benefitting from them? Despite the president’s promise to reduce the country’s inflation rate to 15%, things are still far from normal, especially for businesses.
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