The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) says the Dangote Refinery’s forward integration adoption could lead to a monopoly in disguise.
On June 15, Dangote refinery said it would begin the
nationwide distribution of diesel and premium motor spirit (PMS), also known as
petrol, on August 15.
In a statement on Monday, signed by Joseph Obele, PETROAN’s
national public relations officer, the association said the development could
also pose a significant job loss threat to Nigeria.
“The Petroleum Products Retail Outlets Owners Association of
Nigeria (PETROAN) has 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,” the statement reads.
“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.”
According to the statement, PETROAN had earlier said it
raised alarms about Dangote’s plans to dominate the downstream sector, citing
concerns that the company may use its market power to fix prices, limit
competition, and exploit consumers, “much like it has in other sectors.”
PETROAN warned 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 statement reads.
‘INTRODUCTION OF 4,000 TRUCKS POSES THREAT TO TRUCK
DRIVERS, OWNERS’
The association further warned that the introduction of
4,000 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,” PETROAN said.
The adoption of the strategy by Dangote refinery, the
association said, will significantly affect various stakeholders, including
modular refineries, as their operations and market share may be threatened by
Dangote’s dominance.
“Filling Station Operators: Many may be forced to shut down
due to Dangote’s pricing penetration strategy and dominance,” the statement
reads.
“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 full monopoly of
the downstream sector, which would enable the company to exploit Nigeria’s
petroleum consumers.”
According to the association, this could lead to higher
prices, reduced competition, and decreased economic efficiency.
Speaking on the development, Billy Gillis-Harry, national
president of PETROAN, said the executive director of the Nigerian Midstream and
Downstream Petroleum Regulatory Authority (NMDPRA) and the minister of state
for petroleum “should put in place price control mechanisms to prevent any form
of monopoly.”
Gillis-Harry said competition should always be encouraged to
protect consumers and promote economic efficiency.
‘PETROAN’S RECOMMENDATIONS’
The association asked the federal government and regulators
to encourage a competitive refining market environment.
“Regulatory Oversight: Strengthen regulatory agencies to
monitor market behavior,” the association said.
“Support Local Refineries: Ensure crude oil supply to local
refineries.”
PETROAN also urged the government to mitigate job losses by
exploring alternative livelihoods for affected workers.
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