His scale is impressive, but without competition and public oversight, Dangote’s CNG empire could choke off the very innovation it sparks.
Aliko Dangote is no stranger to big bets. His latest – N720bn ($470m) for 4,000 compressed natural gas (CNG) trucks – is being sold as a logistics upgrade. In truth, it could reshape Nigeria’s energy landscape. It could also tighten his grip on it.
Back in graduate school at the LSE, I read Ron Chernow’s Titan, the biography of John D. Rockefeller who built his empire by mastering refining and distribution. He cut costs ruthlessly and dominated supply chains. Dangote’s move evokes that same approach, but with 21st-century gas infrastructure.
The numbers are enticing. Dangote’s CNG fleet is projected to save Nigeria N1.7trn a year in logistics costs. The trucks cut fuel expenses by up to 90% per kilometre. A diesel truck might cost N25,000 to cover 100 km. A CNG truck costs between N3,000 and N5,000 for the same distance, depending on local gas prices.
Multiply that across thousands of vehicles running daily routes and you see why the headlines trumpet ‘savings’.
Lower logistics costs could mean cheaper fuel at the pump, slower inflation, and better margins for small businesses. Nigeria’s supply chains are among the world’s most expensive, with logistics swallowing as much as 40% of product prices in some sectors. Any reduction is welcome.
Concentration of power
But the real question is not whether CNG is cheaper, it is whether those savings will be passed on to ordinary Nigerians.
Dangote’s plan is a bet on vertical integration. He refines fuel. He will control the trucks that deliver it. He will save money at every step. That is efficient. It is also a concentration of power.
Rockefeller’s monopoly was not born of malice. It emerged because no one else could match his scale and integration. Regulators eventually stepped in. Nigeria is at an earlier stage, but the lesson holds. Concentration is not always planned. It can grow when no counterweights exist.
Dangote’s network risks becoming the default, unchallenged backbone of Nigerian fuel logistics.
There is another risk. For CNG to work on this scale, Nigeria needs an entire ecosystem. That means gas processing plants, modular compression stations, virtual pipelines, truck assembly plants and retail refuelling networks. Without that, even Dangote’s billions will hit limits. Prices will vary wildly. Rural routes will lack supply. Operators outside his network will struggle.
A strong ecosystem could do much more. It could create a new industrial base for CNG components and vehicles. It could support local truck assembly and maintenance firms. Franchise opportunities could emerge for small and medium enterprises. Fuel subsidy savings could be redirected into productive infrastructure, including green industrial parks powered by domestic gas.
That will not happen by accident. Policymakers and financiers need to move now to design incentives and capital structures that promote competition. Otherwise, Dangote’s network risks becoming the default, unchallenged backbone of Nigerian fuel logistics. Once patterns of control are set, they are hard to break.
Effective control
Dangote has anticipated these criticisms. At the Afreximbank meetings in Abuja, he told CNN’s Eleni Giokos that fears of monopoly would fade once the refinery lists on the stock market in 2026. The audience applauded.
But listing is no guarantee of shared control. It can improve transparency, but it does not ensure competition. If a majority shareholder keeps effective control of the board and strategy, the market remains closed in all but name. Nigeria’s history is littered with listed companies that are functionally family firms.
This is not to dismiss Dangote’s plan. On the contrary, his investment may be just the spark Nigeria needs. He is taking the risk others would not. He is proving that CNG can work at scale. He is forcing the conversation about infrastructure, pricing, and energy security.
But his success must not be the final word. Now is the moment for others – government, lenders, entrepreneurs – to fan the flames. Nigeria should not aim for a single dominant CNG player. It should build an open, competitive ecosystem that lets rivals in, supports smaller fleets, and gives regions real choice in supply.
If this works, the benefits go far beyond cheaper fuel. Lower logistics costs will make consumer goods more affordable. SMEs will see better margins. Inflationary pressure will ease. The country will cut its exposure to volatile diesel markets. It is an industrial policy goal worth pursuing.
But let us not confuse a private bet with public policy. Nigeria cannot afford to outsource its energy future to one man, however visionary. Regulators should welcome Dangote’s ambition while making sure it does not become the only game in town.
That is the real lesson from Rockefeller: efficiency is good, but competition is better. Let us get this right while there is still time.
Article first published by The Africa Report.