The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has voiced its dissatisfaction with the Dangote Petroleum Refinery for setting its petrol price at N990 per litre. They argue that this price is unfair, given the significant support Dangote received, especially in foreign exchange access, during the refinery’s construction phase.
PETROAN claims that imported petrol is cheaper than Dangote’s N990 per litre rate. On October 31, 2024, major fuel marketers disclosed that the cost of imported petrol was around N978 per litre, making it more affordable than Dangote’s price.
On Sunday, Dangote refinery accused PETROAN and the Independent Petroleum Marketers Association of Nigeria (IPMAN) of planning to bring substandard fuel into Nigeria. In response, PETROAN’s Publicity Secretary, Joseph Obele, stated that PETROAN could sell petrol at a significantly lower price if given an import license by the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
Obele revealed that PETROAN had established a new business unit, PETROL, aimed at addressing instability in fuel prices within Nigeria’s downstream sector. He emphasized that PETROAN’s approach focuses on patriotic solutions to the challenges in the industry, suggesting that the government’s monopolistic policies are benefiting certain market players at the expense of a fair market.
Encouraging Competition for Fair Pricing
Obele argues that consumers benefit most when there’s healthy competition. “Competition ensures fair prices,” he stated, adding that monopolistic markets often lead to excessive profiteering. He also claimed that Dangote’s accusations about PETROAN importing substandard products were just a tactic to maintain his market dominance.
Obele clarified that PETROAN’s plans to import quality petrol at competitive rates are in place, pending necessary regulatory approval and foreign exchange access from the Central Bank of Nigeria at the official rate. PETROAN is optimistic about entering the market by December 2024.
He further noted that Dangote refinery had not previously disclosed its petrol pricing, which only came after IPMAN and PETROAN declared their intentions to enter the market with lower rates.
Obele’s Critique of Dangote’s Pricing
According to Obele, the N990 price from Dangote refinery does not consider the concessions it received, especially in foreign exchange, during construction. He argues that setting prices based on international market rates is inappropriate in this context, as Dangote’s pricing should reflect actual production costs plus a fair margin.
“Pricing should consider production costs and add a reasonable profit margin,” he added, comparing price differences in goods from different countries to show how production costs impact prices.
Concerns Over Monopoly
Obele alleged that accusations against PETROAN and the recent plan to establish a blending plant in Lagos were tactics to eliminate competition. He noted that Dangote had previously accused the NNPC LTD of importing inferior products to justify his own pricing. Obele criticized this approach as a way to prevent others from entering the market.
PETROAN commended President Tinubu for his efforts in rehabilitating the nation’s refineries, stressing the importance of privatizing the Port Harcourt and Warri refinery plants to enable better competition. They urged that these refineries should be handed over to capable firms with experience, financial strength, and partnerships with critical stakeholders like PETROAN.
Privatization and a Competitive Market
In their statement, PETROAN argued that privatizing refineries could create a fair, balanced market that allows for multiple players, ensuring that consumers benefit from affordable prices. They urged the government to avoid creating monopolies in the downstream sector, which they believe could result in lower petrol prices through competition.
IPMAN’s Stand
Terlumun James, IPMAN’s National Secretary, stated in an interview that the association has no plans to establish a blending plant in Lagos. He encouraged unity among stakeholders to provide affordable energy for Nigerians, stressing that misinformation could harm the market. James also confirmed that IPMAN is pursuing import approval and is in discussions with Dangote.
Dangote Group’s Response
Anthony Chiejina, a spokesperson for Dangote Group, responded by claiming that an international company had rented a depot near the Dangote refinery to blend substandard products, which could then be introduced into the market in competition with Dangote’s products.
When contacted, the spokesperson for the Nigerian Midstream and Downstream Petroleum Regulatory Authority, George Ene-Ita, declined to comment on these developments.
