WHAT IS DANGOTE REALLY UP TO? BY JESUTEGA ONOKPASA

I recently received a report from a learned colleague that Dangote cement plants are currently producing at below or no more than 20 percent capacity and that this is not due to any legitimate constraints but for the purpose of creating artificial scarcity in order to increase prices.

I am not in a position to know exactly what is going on but I am equally reliably informed that in such a situation, no matter how low firms like BUA, Lafarge and other players in the market sell their cement, end users will still unfortunately end up paying high prices for the product because of sheer scarcity.

Obviously, there is no way for Dangote’s competitors to go door to door selling cement and ensure that end users get it at reduced prices: they will still have to sell to distributors who will in turn offload to retailers who then sell to consumers.

If the product, in specie, as opposed to in brand, is scarce, it will end up being priced at a premium regardless of how much manufacturers like BUA, Lafarge or Ibeto are selling it.

While this cement angle is already more than annoying enough, I have equally noticed something pretty strange regarding Dangote’s multi billion dollar refinery. Indeed, for a lawyer who also happens to work in public relations and the media, I find it extremely suspicious and quite puzzling.

There is an emerging narrative that the Dangote Refinery is suffering from supply chain issues and that Aliko Dangote has been constrained to be running across the world looking for crude oil to buy to refine in his refinery. This narrative comes against the background of the rather taciturn proclivities of the management of the refinery. That taciturn inclination only serves to power the inevitable suspicion that it might be Dangote that is surreptitiously pushing the narrative for reasons best known to them.

As for anyone having to look for crude oil to buy in this world, I never heard anything more patently false and pitiably ridiculous in my entire life. The crude oil market is the most perfect market in the entire history of world commerce and global trade.

Let me try to simplify it by contrasting it with something like a fish market, for instance. The fish market in Sapele, Warri, Yenagoa, Port Harcourt, Oron, Calabar or Lagos are all DIFFERENT and SEPARATE fish markets. In fact, within each of these various fish markets, you end up finding what are effectively separate miniature fish markets from the point of view of prices and quality of product.

It is similar to going to buy rice and you are given different prices from two shops that are side by side in the same market. The oil market is totally different. It can best be likened to a single supermarket wherein absolutely all the world’s producers of crude oil take their product to sell.

Let’s call the supermarket “The International Spot Market”. In this market, it is ultimately immaterial where your crude oil supply comes from, be it from Sapele or Siberia: if it is sweet light crude, Bonny Light, Brent Crude or whatever, it is of no moment whether it is from the Niger Delta or from Alaska.

If you have American Dollars, you make a phone call and whatever kind of crude you want will be supplied to you; case closed! Nobody who has a refinery in this world goes looking for crude; if you have a refinery, crude comes looking for you. That is how utterly developed and astonishingly efficient the global petroleum market is.

If, indeed, Dangote claims to be looking for crude oil for his refinery, then he is a liar and only God knows why he would be pushing such an absolutely ridiculous and totally laughable falsehood. In any case, he most certainly couldn’t have carried through a 20 billion dollar investment without securing his supply chain.

Therefore, that utterly crappy narrative must stop forthwith because it is truly annoying and most irritating to genuinely intelligent men who understand the oil and gas industry. There is also an accompanying narrative that Dangote is having problems because he has to buy crude oil in dollars. Please, that nonsense must stop immediately.

Everywhere in this world, crude oil is sold in American Dollars. That’s just how the industry is structured. Is Dangote trying to blackmail us into selling him crude in Naira? Who does that?

If you have an oil well and your father, mother, brother or sister comes to buy oil from you, you will still have to demand dollars from them or your business will collapse. The oil well was constructed in Dollars; the oil rig was procured in Dollars; the entire world oil and gas industry operates in dollars and someone is trying to shake us down to hand him 650,000 barrels a day in Naira? To collapse our oil industry and tank our national economy while he smiles to the bank as the richest black man in the world? Is it not Dollars that Dangote used to build the refinery?

Why should he expect the crude oil he is going to refine there to be handed to him in Naira? We’ve even heard Dangote got money from our Central Bank to build the refinery for himself. You will collect Dollars from us to build a refinery for yourself and still expect us to sell crude oil to you in Naira? He will frustrate competitors out of business and keep seeking to control entire industries in Africa’s biggest economy? This is simply intolerable.

Even his own tribesman, Abdul Samad Rabiu, from the same town, for that matter, Dangote is alleged to have regularly tried to muscle out of contention and it is a testament to the resilience, resourcefulness, tenacity of Rabiu that he is still in business today. Is that how we are going to be running our national economy? On the basis of an animal farm wherein all animals are supposed to be equal but some are more equal than others?

The impression thus created is that Dangote is not as much of a businessman as he is a rent-seeker, indeed that he has become a self-entitled industrialist addicted to playing above the rules. This is a nation of 200 million plus people, for God’s sake. We are the most populous black nation on Earth indeed, the pride of the black nations of the entire world.

Dangote will just have to be made to understand that we will not tolerate monopolies here. He may be the richest man in Africa, but together we are the Giant of Africa. At the end of the day, he is just one of us and we are far more than him. He must learn to respect us and play by the rules or God help him.

Onokpasa, a lawyer, writes from Abuja.