Nigeria’s Fuel Crisis And Presidential Control: Is The Dangote Refinery A Game-Changer Or Part Of The Problem?

Nigeria’s fuel crisis has persisted despite successive presidents retaining control over the Ministry of Petroleum Resources. From Olusegun Obasanjo to Muhammadu Buhari, and now Bola Ahmed Tinubu, Nigerian leaders have held onto this strategic position, raising questions about their motives. While this practice has not solved the fuel scarcity problem, the current administration under Tinubu has even seen the situation worsen, despite the much-anticipated Dangote Refinery.

This article delves into the reasons behind the concentration of power in the petroleum sector and examines whether the Dangote Refinery will bring relief or reinforce monopolistic control over Nigeria’s fuel supply.

When Nigerian presidents control the petroleum ministry, they gain significant power over the oil sector, which is critical to the nation’s economy. This centralized control gives room for monopolistic practices and could explain why fuel scarcity persists despite the vast resources at the government’s disposal.

One major cause of fuel shortages is the lack of refining capacity, forcing Nigeria to import most of its petroleum products. By controlling the ministry, presidents hold sway over the importation process, including issuing licenses, which presents opportunities for monopolizing the fuel supply chain. They can manipulate fuel prices, and scarcity provides a convenient cover to raise these prices, maximizing profits for both the government and selected private players.

Fuel subsidies were designed to keep prices low for Nigerians, but they have been riddled with corruption. Those in control, often under the direct influence of the presidency, misused these funds. The subsidy system became a means to siphon money while maintaining a façade of affordability for the public. As ministers of petroleum, presidents could exploit both the distribution of funds and the oversight agencies to benefit from these illicit gains.

Another hidden benefit of controlling the petroleum ministry is the ability to influence multi-billion-dollar oil contracts. With no independent oversight from a dedicated minister, presidents control the awarding of oil blocks and exploration licenses, often benefiting insiders and allies. This further entrenches monopolistic control over the oil sector.

The Dangote Refinery, with a capacity of 650,000 barrels per day, was initially seen as a potential solution to Nigeria’s fuel woes. However, given the monopolistic tendencies in the sector, the refinery raises concerns. With state-owned refineries underperforming, the Dangote Refinery could dominate the local refining market, effectively creating a monopoly in domestic fuel production.

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The close relationship between the Nigerian government and the Dangote Group adds another layer of complexity. The government has supported the refinery through tax breaks, favourable policies, and indirect financial backing. This raises the possibility of a partnership where both parties benefit financially from market control, while ordinary Nigerians bear the brunt of high fuel prices.

Despite the refinery’s large capacity, fuel scarcity and high prices persist. Once fully operational, it’s unclear whether the refinery will sell fuel at affordable prices or follow global market trends. With presidential control over the petroleum ministry, the government could influence how the refinery operates, potentially allowing prices to remain high for its benefit and that of the refinery, rather than ensuring affordable fuel for Nigerians.

With the Dangote Refinery potentially becoming the dominant player, and state-owned refineries barely functioning, Nigeria risks creating a fuel monopoly. The presidency’s control over the petroleum ministry means there may be little political will to encourage competition. This could lead to a situation where both the government and the Dangote Refinery control fuel supply, keeping prices elevated for consumers.

To address Nigeria’s fuel crisis and prevent monopolistic control, several reforms are necessary. The president should relinquish direct control over the petroleum ministry. An independent, competent minister should manage the sector to ensure transparency and reduce financial conflicts of interest.

Nigeria’s state-owned refineries must be revitalized to compete with the Dangote Refinery. Without competition, the Dangote Refinery will dominate the market, reinforcing a monopoly that keeps prices high. The government should also create a favourable environment for other private companies to invest in refineries. A competitive refining market would ensure better pricing and stable fuel supply.

The government must establish clear fuel pricing regulations and ensure transparency in contracts involving the Dangote Refinery. An independent regulatory body should monitor operations and ensure local fuel needs are met at fair prices.

The Dangote Refinery, while promising to address some of Nigeria’s fuel challenges, could also become part of a broader scheme to monopolize the sector. With the presidency retaining control over the petroleum ministry, there is a risk of a de facto monopoly that benefits a select few at the expense of ordinary Nigerians. To break this cycle, the government must prioritize competition, transparency, and accountability, ensuring that the oil sector benefits all Nigerians.

By
Sir Divramredje Lawrence Efeturi, KSJI, ASCIEPUK (An affected Nigerian and public affairs commentator).