Dangote fuel rollout may create hidden monopoly, PETROAN warns
The Petroleum Products Retail Outlets Owners Association of Nigeria has expressed fears that Dangote Refinery’s initiative to distribute diesel and petrol across the country, beginning August 15, may lead to a concealed monopoly in the market.
Recall that Dangote Refinery revealed its plans to commence nationwide distribution of diesel and premium motor spirit, often referred to as petrol, starting August 15.
In a statement issued on Monday by PETROAN’s National Public Relations Officer, Joseph Obele, the association cautioned that this development could result in considerable job losses in Nigeria.
“The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has expressed worries about Dangote Refinery’s strategy of forward integration, warning that it might lead to a disguised monopoly and pose a serious threat of job losses in Nigeria.
“With a production capacity of 650,000 barrels per day, PETROAN asserts that Dangote Refinery should be competing with global refineries, rather than assuming the role of a distributor in the downstream sector.
“This large refinery, among the biggest in sub-Saharan Africa, is anticipated to meet domestic fuel needs and export excess products,” the statement notes.
PETROAN indicated that Dangote Refinery’s implementation of this strategy could severely affect various stakeholders, including modular refineries, whose operations and market share may be jeopardized due to Dangote’s increasing influence.
The statement from PETROAN recalled its previous concerns regarding Dangote’s ambitions to control the downstream sector, cautioning that the company might exploit its market power to dictate prices, suppress competition, and take advantage of consumers—“similar to its actions in other sectors.”
The association further warned that Dangote’s approach might involve a pricing strategy aimed at penetrating the market—initially lowering prices to capture market share, with the ultimate goal of driving other filling station operators out of business.
“This could trigger a widespread closure of filling stations throughout Nigeria, leading to extensive job losses,” the statement indicates.
The association also cautioned that Dangote Refinery’s plan to deploy 4,000 new compressed natural gas (CNG)-powered tankers presents a significant risk to the jobs of numerous existing truck drivers and owners.
“Although CNG trucks may provide a more economical means of transporting petroleum products, this transition could result in widespread job losses within the industry,” PETROAN asserted.
It added that Dangote Refinery’s strategy would have significant implications for various stakeholders, particularly modular refineries, whose operations and market presence could be diminished by Dangote’s market supremacy.
“Filling Station Operators: Many may face closure due to Dangote’s aggressive pricing strategy and market dominance.
“Local Suppliers of Petroleum Products: Their businesses may suffer as a result of Dangote’s direct access to end-users.
“Telecom Diesel Suppliers: Their operations and market share may be jeopardized by Dangote’s supremacy.
“It is evident that Dangote intends to establish complete control over the downstream sector, which would allow the company to exploit Nigerian petroleum consumers,” the statement states.
The association warned that this situation could lead to elevated fuel prices, diminished competition, and a reduction in overall economic efficiency.
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