The Depot and Petroleum Products Marketers Association of Nigeria has called out an emerging monopoly in the downstream petroleum sector.
The marketers recently warned that the dominance of the Dangote Refinery can easily destabilise the market if not managed carefully.
Speaking during an interview with TVC, the Executive Secretary of DAPPMAN, Olufemi Adewole, said that while there are no cabals in the sector, the existence of vested interests among private depot owners who have invested their hard-earned money to deliver fuel to Nigerians cannot be disregarded.
According to him, Dangote Refinery’s scale gives it lots of influence over pricing and supply channels, and that poses a clear danger of monopoly that should be addressed before it escalates.
He stated that Dangote Refinery can easily manipulate prices however it wants due to the level of control it currently has, so regulators must step up immediately to ensure no organisation deviates from the provisions of the Petroleum Industry Act, which stands for a free market.
“You can’t stop importation today. That would create chaos and a monopoly. Yes, it can be stopped—but only when we have adequate local production from several sources, not just one.
The concerns of possible monopoly in the downstream of the petroleum sector are what we can term as a clear and present danger. We have been talking about it. We have been deliberating about it.
Right now, we have a refinery, a 650,000 barrel capacity refinery. Its price, volume and capacity alone give the refinery the edge over all others. It can manipulate prices. It can dictate prices. It can get what it wants. So it’s a clear and present danger for us, and we would rather not have it that way.
But the beautiful thing is that we have the regulators, who have been doing fantastically since they came on board. They are ensuring that no organisation deviates from the provisions of the Petroleum Industry Act, which ensures that it is a free market, and many players can come in and play in the system, and anything that goes towards monopoly is checkmate,” he said.
Olufemi disclosed that investors who have put in billions of naira over the years to bridge the gap, even before Dangote joined in, have every right to want returns on their investment.
“There is no cabal in the midstream and downstream operations as far as I am concerned, because, going by the English definition of the word cabal, it’s a negative, subversive thing. There is no cabal. But I can tell you that we have vested interests.
My principals have vested interests in the sector. So if they have invested over these years, billions of Naira, and they have bridged the gap, even before Dangote, they were there when nobody was there to bridge the gap and ensure Nigerians get fuel. Definitely, they should have commensurate returns on their investment.
So, on that, I would say there is no cabal, but there are vested interests,” he added.
