₦airaland Forum

Guys jokes apart

Sorry I am bringing up this matter again

Let me give you guys a thorough economic point of view of the apparent implications of

Dangote actions and why I don't support it

The unnecessary subs from those for and those against aren't necessary

If we don't understand the economic implications of what his actions portends

Therefore in the particular post

I would do two things

To tell you all why what Dangote is doing is a clear and present
danger even unknown to him

And what he should have done as I have previously said in a light hearted manner

Simon Osigwe
Lanre Ayoola
Layi Deinde
Femi Ogunsanwo II
Uzochukwu Oluo
Arogha Shadrach

I am addressing this to you guys and I hope for once

You guys should read it to learn one or two things

This is a dispassionate piece based on the concept of the economics of energy security and I am writing it from an unbiased economic standard point ...

Read and get enlightened

The Economic consequences of a
Business war

When the Dangote Refinery was commissioned, no doubt

it was hailed as Nigeria’s economic turning point.

The promise was bold: the refinery would end our dependence on imported petrol, save the country $10–15 billion annually in forex, create hundreds of thousands of jobs, and strengthen the naira.

Two years later, the refinery is operational.

Indeed Imports of petrol have indeed declined.

Yet the naira has crashed further, jobs in the downstream sector have been wiped out, and Nigerian banks now sit on trillions of naira in risky loans tied to a collapsing value chain.

It is time to look past the hype and confront the two uncomfortable truths:

Indeed the forex savings were an illusion, and the banking system is being pushed toward crisis.

Let's start from

The Forex Illusion

On paper, reducing imports should have strengthened the naira.

If Nigeria no longer spends $10–15 billion annually importing refined products, that demand for dollars should disappear, leaving the currency stronger.

In practice, the opposite happened:

• The naira has collapsed from about ₦750/$ in May 2023 to over ₦1,500/$ in 2025 at the parallel market.

• Reserves remain stagnant at around $32–34 billion, showing no sign of “forex savings.”

Why?

*1. Crude is still priced in dollars.

The refinery buys crude from NNPC and also imports at international benchmark prices.

That means Dangote still requires dollar value — whether directly or through swaps.

We have only changed who pays, not the structure of forex demand

Not to talk about the bigger elephant our dollar earnings have not grown ...

*2. Export earnings don’t return home.*

When Dangote exports diesel or petrol to West Africa, the refinery earns dollars.

But those dollars are not automatically injected into Nigeria’s forex reserves or the official market.

Like other corporates, Dangote can retain forex offshore or use it to service foreign loans

( Remember he is operating from a FTZ)

Dangote can't say of a truth his export proceeds are repatriated 100%

The savings Nigerians were promised never materialize in the system..

But Did he really care?
Story for another day

3. Other pressures outweigh refining gains.

• Nigeria consistently under-produces its OPEC quota.

• More than 40% of oil revenues go to debt servicing.

• Imports of food, pharmaceuticals, machinery, vehicles, and education abroad still drive dollar demand.

4. Subsidy(I don't like that word) changed it's nomenclature

Even with local refining,

ex-depot prices are higher than what government can allow at the pump,

the FGN quietly absorbs the difference under a new nomenclature ...

Forex “savings” are therefore masked by "hidden costs" .

This is the unvarnished truth.

Dangote reduced fuel imports, but the naira kept falling because forex demand is structural and the refinery’s dollars never flow back into Nigeria’s reserves.

Then
The Banking Timebomb....

While the forex illusion plays out,

Nigeria faces another danger: the silent collapse of downstream loans that banks have financed for decades.

Tank Farms Under Siege

Over 200 tank farms and depots were built across Apapa, Ijegun, Kirikiri, and Port Harcourt,

largely financed by Nigerian banks. Each facility cost ₦10–₦20 billion, and collectively banks have ₦2–₦3 trillion tied up in this infrastructure.

Now that Dangote controls refining and wholesale supply, many of these depots are going redundant

Revenues collapse,
but loan repayments remain.

The result: rising non-performing loans (NPLs)

Our banks are in a liquidity mess..


Trucking and Haulage Defaults

The Petroleum Tanker Drivers Association once counted 50,000+ active drivers, supported by thousands of fleet owners.

Each truck cost ₦40–₦60 million, financed through bank leasing and credit.

That’s ₦1–₦2 trillion in exposure.

With over 27,000
Petrol stations nationwide not to talk about floating stations in the coastal regions

As distribution consolidates under Dangote’s logistics arm, smaller truckers lose contracts, and their loans turn sour.

Import and Trade Finance Losses

Fuel imports once generated billions in banking activity:

• Letters of Credit (LCs)
• FX spreads
• Trade finance fees

These were not just income streams but liquidity engines for the banks.

With imports gone, banks lose this business entirely.

*In total, banks face ₦3.5–₦5 trillion in downstream exposure now at risk.

Banks will lose business worth over
₦30 trillion ...

That's were the economic costs of
Dangote's business action is creating for other Industry players within the value chain.

These are the reason I am very displeased

Meanwhile
Please this is

Not an Argument for Returning to Imports

That ship has sailed
the era of fuel imports that cost Nigeria $10–15 billion annually.

That chapter must remain closed.

The real argument is that a refinery monopoly without integration of existing value chains is economically dangerous.

Tank farms can still store Dangote’s products.

Truckers can still haul them.

Traders can still distribute them.

But if these players are excluded,

Nigeria will end up with one powerful refinery on one side, and trillions in unpaid loans choking the banking system on the other.

And job loses in that down stream sector of over 600,000 persons

Now
The Core Question

For every refinery job created,

Nigerian banks face ₦100 million in loans turning bad.
For every dollar “saved” on imports, the naira still weakens because the savings never reach the market.

The Dangote Refinery is an industrial achievement, no doubt.

But unless it integrates downstream value chains and repatriates forex earnings transparently, it risks becoming both a forex illusion and a banking timebomb.

This is the truth Nigerians Deserves to know

The refinery was sold as our economic savior.

In reality, the promised forex savings haven’t stabilized the naira, and the exclusion of existing downstream players threatens the survival of Nigeria’s banks.

If this trajectory continues, the refinery may save Dangote — but it could sink the very financial system that underpins Nigerian businesses and households.

That is the debate we must have, openly and urgently.

For me I have earlier said what he should have done

Let me repeat it

Dangote should
Co-opt all parties in the value chain under a shared Prosperity framework

What he he should have done

He ought to have convoked a stake holders meet with a view to fashion a harmonious working relationship with them and cut deals with them ..

All he needed to do was to enter into an arrangement with NNPCL

lay a 100km pipeline to Mosemi/
Atlas Cove from Ibeju Lekki ....and hook up to the existing NNPC product pipeline grid

And
Just be a "good boy" and be paying thruput fee to PPMC

everybody will love him as a rockstar!

Then undertake to upgrade the existing pipeline grid as his contribution to the enhancement of the
existing Petroleum Pipeline infrastructure in Nigeria -

(The Nigeria I know will give him up to ten year tax breaks for this )

It
Will reduce delivery logistics costs and too many tankers on the highways thus increasing efficiency

They will love him more because it's business for every body .

All the NUPENG members can decide which depot across Nigeria at they would load products instead of all congesting Lekki end with trucks as well as Apapa - they would love him for it ..

Then undertake to either build or collaterise the
Building of a tank farm around Lokoja axis
(Which will also service Asaba/Onitsha)

As a joint venture with pre-qualified selected industry player nominated by IPMAN as the case might be
Not the nepo MRS owned by his cousin for good measure

Where at least 5 dedicated 5kMT barges can deliver products

Where each is making 2 trips a week to service the North.. Asaba/Onitsha

Then also get vessels
To deliver at tank farms in the SS to service the SS and parts of SE

Every body will be happy because they all have business from him ...

He is giving them an opportunity to thrive

Instead the DON KING and wise guy

Who decided to go solo that
went to buy
"one million CNG trucks"
( so that they will be causing congestion and accidents on our highway)

He wants to refine and distribute by him self
in an attempt to cut off others in the value chain ..

Like

NUPENG

Independent Marketers ( whatever names they bear)

Vessel owners

Tank farm owners

Banks/Insurance companies - create a huge default on loans and a resultant financial crisis

And now he wants to face PENGASIN ?

Na only him Waka come?

He should be making friends it's a win win situation for everyone

This alone would create more jobs across logistics construction and support services..

He must learn to

Collaborate
Co-opete ...

Leave small food for others to chop ...that's how you engender shared prosperity...

This is a fight that hurts everyone as a war of attrition...

Wisdom and sanity needs to prevail

This is my candid opinion devoid of bias

And I thank my friend and colleague
Abdulazeez for his very intelligent invaluable
inputs to this post

This is the clear and present danger that we face us if

Dangote isn't checked

Written by Asonumaka Wakama

Nice and educative piece..

Dangote right from the onset didn't have good intentions for Nigeria.. part of reasons he sited the refinery in Lekki Free Trade Zone (FTZ).

Like I once said here.. FTZs were originally designed for export purposes only.. reason being that they are free zones, free from checks, fines, regulations from the Nigerian State. It's ILLEGAL for petroleum products from Dangote refinery to be sold in the Nigerian market because it's considered in the face of the law as imported product.

The Northerners have bastardized everything in favour of their brother and it's sad.. the books are there, anybody can verify what FTZs stand for and the laws governing their establishment.

Nigerians should stop using emotions in everything.. Dangote doesn't pay tax to the Nigerian State because of the FTZ but huge chunk of Nigerian tax payers money were diverted to build his refinery. Where is the sense in that?.

flokii:
Nice and educative piece..

Dangote right from the onset didn't have good intentions for Nigeria.. part of reasons he sited the refinery in Lekki Free Trade Zone (FTZ).

Like I once said here.. FTZs were originally designed for export purposes only.. reason being that they are free zones, free from checks, fines, regulations from the Nigerian State. It's ILLEGAL for petroleum products from Dangote refinery to be sold in the Nigerian market because it's considered in the face of the law as imported product.

The Northerners have bastardized everything in favour of their brother and it's sad.. the books are there, anybody can verify what FTZs stand for and the laws governing their establishment.

Nigerians should stop using emotions in everything.. Dangote doesn't pay tax to the Nigerian State because of the FTZ but huge chunk of Nigerian tax payers money were diverted to build his refinery. Where is the sense in that?.

It's really pathetic, our kind of monopoly is very wack and unreasonable to me