Oil marketers under the aegis of the Petroleum Products Retail Outlets Owners Association of Nigeria have reacted to the Dangote Petroleum Refinery’s plan to distribute fuel directly to filling stations and other businesses nationwide.
They recently expressed their concerns about the decision, warning that the policy could lead to more unemployment across Nigeria.
Speaking via a press statement, PETROAN’s Publicity Secretary, Joseph Obele, said that the latest development could lead to Dangote enjoying an unfair monopoly in the country’s oil sector.
According to him, with a production capacity of 650,000 barrels per day, the Dangote refinery should be focused on competing with global refineries, not operating as a distributor in the downstream sector.
He stated that PETROAN has always maintained that Dangote intends to completely dominate the downstream sector, and the recent decision by his company is further proof.
“This massive refinery, one of the largest in sub-Saharan Africa, is expected to satisfy domestic fuel demand and export surplus products.
The company may leverage its market power to fix prices, limit competition, and exploit consumers, much like it has done in other sectors,” it read.
He noted that Dangote plans to introduce a pricing penetration strategy that would decrease prices to attract market share, with the eventual goal of forcing other filling station operators to exit the market.
PETROAN concluded by saying that the forward integration strategy by the Dangote refinery would massively affect several stakeholders who would be threatened by Dangote’s dominance.
“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-powered tankers by the 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.
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. This could lead to higher prices, reduced competition, and decreased economic efficiency.
The National President of PETROAN, Dr Billy Gillis-Harry, calls on the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority and the Minister of State for Petroleum Resources to put in place price control mechanisms to prevent any form of monopoly,” he added.
