Dangote and the Power Sector
Olusegun Adeniyi
A crispy social media post is doing the rounds on WhatsApp. It begins with the story of Alhaji Aliko Dangote’s recent call for urgent investment in the power sector, stressing that Nigeria must design, fabricate and build what it consumes to achieve true economic independence. “We must build (the) power grids. I keep repeating, we must build it,” Dangote said at the induction ceremony of the Nigerian Academy of Engineering Fellows in Lagos, where he also confirmed that he elected to supply his own electricity rather than take from the national grid. “Together, let us engineer a Nigeria that works not just for some, but for everyone.” One Misbahu Abubakar then added the line that sums up his post: “He is begging them now, but once Dangote builds the power grid, foolish people will start shouting Monopoly.”
The interesting thing is that such a proposition is actually not farfetched. A 17th June 2024 report in BUSINESSDAY newspaper highlighted how it took Nigeria 11 years to add just 760 megawatts of power to the national grid while Dangote was able to generate about 1,500 megawatts of electricity for his businesses in a shorter time. “The challenge of the power sector has not entirely been the scarcity of funds; several trillions of naira have been pumped into that industry,” Charles Akinbobola, a senior energy analyst at Sofidam Capital was quoted to have said in the report. “The sector has been plagued by the shortcomings of its managers”.
Like he did with cement and then refineries, Dangote sees opportunities where others see challenges. And as I have had to explain to those who accuse me of bias in his favour (which I do not deny), the challenge of entrepreneurship in Nigeria is because we have a very few risk takers like him. Most of the people who have also had Dangote’s opportunities have either wasted theirs or bartered them for cheap wealth with which they feed their vanity. Besides, I know many people who were so sure Dangote would not successfully complete his refinery and that it would sink him. But he took the big gamble and after more than a decade facing different odds, he is now reaping enormous rewards.
We must all recall that the licensing process for refineries was liberalised by the President Olusegun Obasanjo administration and to date, no fewer than 70 such licences have been issued but only few have bothered to put in any investment. In fact, on 17 February 2018 in Bayelsa State, at the foundation laying ceremony for the establishment of Azikel Refinery (one of the 22 licences given by the late President Muhammadu Buhari in 2015), Obasanjo publicly lamented that none of the 18 licenses he approved during his tenure performed. “During my tenure, I gave 18 licenses but none were actualized; Nigerians should follow the good step to move the nation forward,” he said.
Even the Nigerian National Petroleum Company Limited (NNPCL) management that has expended billions of dollars (trillions of Naira) on endless turn around maintenance (TAM) of the federal government-owned refineries is now only talking about signing a curious Memorandum of Understanding (MoU) on a potential Technical Equity Partnership (TEP) with Chinese companies. That precisely is why I aligned myself with the position of the Centre for the Promotion of Private Enterprise (CPPE) on a recent World Bank recommendation that Nigeria should sustain the importation of Premium Motor Spirit (PMS) to stabilise fuel supply.
Although a few people jumped at the idea (before the World Bank deleted the statement from its website), apparently thinking it would hurt the ‘monopolist’, the CPPE had described it as deeply troubling and fundamentally misaligned with Nigeria’s current economic realities and reform trajectory. “At a time when the country is making measurable progress in restoring macroeconomic stability—evidenced by improving foreign reserves, moderating inflation, a more stable exchange rate regime, and growing capacity for the export of refined petroleum products—the policy priority should be to consolidate these gains, not undermine them,” according to the CPPE Director General, Muda Yusuf.
Let me also make something clear here. In the dog-eat-dog business climate, especially in a country like ours, I cannot pretend that a man like Dangote would not rob some of his competitors the wrong way. But I remain firmly convinced that the creation of indigenous ‘monopolies is inevitable for any national economy that wants to achieve global competitiveness. For instance, no one can think of the growth and prosperity of the United States without DuPont, Rockefeller, Ford and others. Nor can we imagine the growth of South Korea without the conscious cultivation of Samsung, Goldster and Hyundai.
For me, Dangote has achieved the unusual. He has demonstrated the possibility of a productive Nigerian capitalism and its extension to the rest of Africa. With the Iranian closure of the strait of Hormuz, he has even made Nigeria part of the global conversation in the supply of Jet fuel from his refinery. And with the way he has boycotted the grid to provide electricity for all his mega projects, Dangote has also proved that power supply is not rocket science. I hope we don’t create a situation in which he dabbles into the sector and then we begin to shout ‘Monopoly’!
• You can follow me on my X (formerly Twitter) handle, @Olusegunverdict and on www.olusegunadeniyi.com