Uche Cecil Izuora
The Petroleum Products Retail Outlets Owners Association of Nigeria, has urged the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Minister of State for Petroleum to put in place price control mechanisms to ensure sustainable pricing environment in the downstream petroleum industry.
PETROAN, made the appeal after raising concerns as Dangote Refinery announced plans to begin direct distribution of premium motor spirit and automotive gas oil nationwide.
PETROAN’s spokesperson, Joseph Obele, made this known in a statement on Monday.
Reacting, PETROAN warned that the development poses significant job loss threat to Nigeria.
The PETROAN argued that Dangote Refinery should be competing with global refineries, not operating as a distributor in the downstream sector.
According to PETROAN, the latest Dangote Refinery move portends a significant threat to the livelihoods of thousands of truck drivers, owners, and filling stations in Nigeria.
The Association added that this could lead to higher prices, reduced competition, and decreased economic efficiency.
The National President of PETROAN, Billy Gillis Harry, said, “PETROAN raised concerns about Dangote Refinery’s forward integration adoption, warning that it could lead to a monopoly in disguise and pose a significant job loss threat to Nigeria.”
“With a production capacity of 650,000 barrels per day, PETROAN argues that Dangote Refinery should be competing with global refineries, not operating as a distributor in the downstream sector. This massive refinery, one of the largest in sub-Saharan Africa, is expected to satisfy domestic fuel demand and export surplus products.
“PETROAN has previously raised alarms about Dangote’s intentions to dominate the downstream sector, citing concerns that the company may leverage its market power to fix prices, limit competition, and exploit consumers, much like it has done in other sectors.
“PETROAN warns that Dangote’s tactics may include a pricing penetration strategy, where they reduce prices to capture market share, with the ultimate goal of forcing other filling station operators to quit the market. This could lead to a massive shutdown of filling stations across Nigeria, resulting in widespread job losses.
“The introduction of 4,000 brand-new Compressed Natural Gas (CNG)-powered tankers by Dangote Refinery poses a significant threat to the livelihoods of thousands of truck drivers and owners. While CNG trucks may offer a lower cost of transporting petroleum products, this shift could lead to widespread job losses in the industry.
“Impact on Various Stakeholders: The adoption of a forward integration strategy by Dangote Refinery will greatly affect various stakeholders, including:
Modular Refineries: Their operations and market share may be threatened by Dangote’s dominance.
Truck Owners: Job losses and reduced business opportunities may occur due to Dangote’s direct supply and CNG-powered tankers.
Filling Station Operators: Many may be forced to shut down due to Dangote’s pricing penetration strategy and dominance.
Local Suppliers of Petroleum Products: Their businesses may be negatively impacted by Dangote’s direct supply to end-users.
Telecom Diesel Suppliers: Their operations and market share may be threatened by Dangote’s dominance.
“It is obvious that Dangote plans to gain a full monopoly of the downstream sector, which would enable the company to exploit Nigeria’s petroleum consumers.
Harry emphasises that competition should always be encouraged to protect consumers and promote economic efficiency,” the statement reads.