Dangote refinery attempting to maintain monopoly – PETROAN

The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has accused Dangote Refinery of attempting to maintain a monopoly in the country’s downstream petroleum sector.

The association made this known in reaction to a claim by the refinery that anyone importing petrol at lower prices likely brings in substandard products, posing health and environmental risks.

The PETROAN in a statement on Monday signed by its National Public Relations Officer, Joseph Obele, alleged that Dangote Refinery’s recent claims that PETROAN would import substandard petroleum products were “usual gimmicks” to maintain dominance.

“The publication by Dangote Refinery that PETROAN will import substandard petroleum products is not coming as a surprise to stakeholders because such is his usual gimmick for maintaining a monopoly. The publication was coming after PETROAN and IPMAN announced plans to sell far less than the current Selling rate of Premium Motor Spirit (PMS) in Nigeria,” the statement said.

Mr Obele claimed that the association plans to import high-quality petrol at a lower price than the current rate, citing agreements with foreign refinery counterparts and financial partners.

“PETROAN has concluded plans with her foreign refinery counterparts and financial partners to import the best quality of PMS and then sell far less than the present selling rate of PMS in Nigeria. We planned to enter the market before December 2024, pending the approval of our import permit license by the regulatory agency and access to foreign exchange from the Central Bank of Nigeria (CBN) at the official rate,” he said.

On Sunday, Dangote Refinery said it sells its petrol at N960 per litre into ships and N990 per litre into trucks.

The company’s Group Chief Branding and Communications Officer, Anthony Chiejina, said its prices are benchmarked against international rates, ensuring competitiveness.

At the same time, Mr Chiejina said an international trading company has recently hired a depot facility next to the Dangote Refinery, with the objective of using it to blend substandard products that will be dumped into the market to compete with Dangote Refinery’s higher quality production.

In its statement on Monday, PETROAN said before now, the Dangote refinery refused to make public her selling rate of petrol until the Independent Petroleum Marketers Association of Nigeria (IPMAN) and PETROAN announced readiness to sell less.

The association said intensive or aggressive competition in any market brings the best value for money exchange for a commodity.

“Consumers get the best value for pricing when competition is at its peak, hence competition should be encouraged. Contrarily to competition, such a market will be exploitative and strictly for profiteering,” it said.

The association explained that the rate of N990, as announced by Dangote Refinery, was “inconsiderate” based on the fact the refinery enjoyed massive concessions for accessing foreign exchange during the construction of the refinery.

“The core determinant for setting price is consideration for cost of production then adding a fair margin. But this wasn’t the case for the determinant of PMS price by Dangote Refinery as they said, the parameter was comparison with the international selling rate at the global market.

“A nation that gave you a yet to be disclosed concession for foreign exchange which was highly criticised by financial expert’s, such a country pricing template shouldn’t have been templated by the selling rate at the international market but rather it should have been cost of production plus fair margin,” the statement said.

Mr Obele further explained that goods from the China markets are not selling as high as goods from the American market because the cost of production differs.

“The allegations that PETROAN will import inferior products and also that an international company is trying to establish a PMS blending plant in Lagos are all strategies for Dangote Refinery to push others out of the market in view of achieving monopoly for exploitation.

“Few months ago the Chief Executive Officer of Dangote refinery said the Nigerian National Company Limited (NNPC Ltd) was importing inferior petroleum products, that his own was far better than what NNPC Ltd was selling to marketers. In another press conference, he said the refinery in Malta was just a blending plant and not a refinery. All the allegations are with the objectives of closing the doors for other operators so as to enjoy monopoly,” he said.

NNPCL Towers, Abuja

According to him, pieces of evidence available showed that diesel (AGO) as a deregulated product was selling for less than N800 in the Nigeria market a few weeks before the commencement of AGO production by Dangote Refinery, noting that at the entrance of the AGO market by Dangote refinery, the country witnessed a rapid surge above N1,000 as against the perception of a “salvaging refinery.”

The association appealed to the federal government to prevent monopoly in the downstream sector, citing the need for an all-inclusive stakeholders meeting to resolve petrol pricing instability.

“A balanced market should be an all-inclusive market player where the market leader is enjoying his lead, while the market challenger is servicing a certain degree of the consumers and the market followers are still surviving in the market at an affordable price.

“Therefore, it is penitent that the federal government should discourage and dismantle any attempt of monopoly in the downstream sector in view of crashing the current selling rate of PMS,” the statement said.

Mr Obele added that the only catalyst to trigger petrol price reduction is by ushering in competition and

“PETROAN will support the federal government in achieving intensive competition in the sector. Most importantly, the solution to the ongoing downstream sector pricing turbulence and instability is for Mr President to midwife or delegate an all-inclusive stakeholders meeting including the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), the Major Energies Marketers Association of Nigeria (MEMAN), PETROAN, IPMAN, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN).

“This meeting tends to get first-hand valuable inputs from the industry players in view of having a final solution for PMS pricing in the downstream sector,” he said.

Background

Last Tuesday, Aliko Dangote, founder and president/chief executive of the Dangote Group, said his refinery has more than 500 million litres of petrol in stock, but marketers have not been buying the product.

He questioned why the NNPC and private retailers were still importing petrol when his refinery could produce enough.

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“So, I am expecting that the NNPC Ltd and the marketers should stop importing; they should come and collect what they need,” Mr Dangote said Tuesday.

Mr Dangote did not say for how long the 500 million litres of petrol had been refined and stored by his 650,000 barrels per day refinery.

However, PREMIUM TIMES reported that data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) showed that his refinery was unable to meet the required volume of petrol sought by NNPC Ltd for three weeks.

According to the Dangote Evacuation Report seen by this newspaper, between 15 September and 5 October, the refinery delivered only 148 million litres of petrol, instead of 575 million litres.

Last Thursday, Dangote Refinery said it has not received any payments for the purchase of refined petroleum products from the IPMAN. The company made this known in reaction to a claim by the marketers that they were unable to load petrol from the refinery for days.