Downstream and deepening crisis of confidence between Dangote Refinery, oil marketers over petrol pricing

*Dangote Petroleum Refinery’s petrol prices compare with selling rates in the global oil market, as only ‘substandard’ petroleum products could be imported at cheaper rates than ours ─Management

*PETROAN Spokesman reacts: Dangote’s accusation of importing substandard products into Nigeria at cheaper rates is ‘his usual gimmick for maintaining monopoly’

Gbenga Kayode | ConsumerConnect

The lingering issue of arriving at acceptable ‘petrol pricing’ has continued to generate accusations and counter-accusations between the Nigerian National Petroleum Company (NNPC) Limited, Dangote Petroleum Refinery, and oil marketers, including the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Independent Petroleum Marketers Association of Nigeria (IPMAN), among others in the country.

ConsumerConnect reports the deepening crisis of confidence over petroleum product pricing between Dangote Petroleum Refinery and oil marketers is fast inducing downstream sector pricing turbulence and instability in the sector.

PETROAN, again, has accused Dangote Refinery of attempts to suppress competitors in the downstream sector of the petroleum industry in Nigeria.

The fuel marketers’ latest accusation followed Dangote Refinery’s claim that marketers are complaining of its petrol pricing because they want to import substandard petroleum products into Nigeria at cheaper rates.

Besides, both PETROAN and the Independent Petroleum Marketers Association of Nigeria have stated that they can buy petrol at cheaper rates than Dangote Refinery’s rates.

Mr. Anthony Chiejina, Group Chief Brand and Communications Officer at Dangote Group, Sunday, November 3, thus disclosed the oil-refining plant sells petrol at N990 per litre into trucks and N960 per litre into ships respectively.

The Spokesman of Dangote Group also noted that the refinery’s pricing is in comparison with the international selling rate in the global oil market.

Chiejina, in the statement also insinuated that only substandard petroleum products could be imported at cheaper rates than Dangote’s rates.

Subsequently, Joseph Obele, Spokesperson of PETROAN, Monday, November 4, 2024, in a statement as a direct response to Dangote Petroleum Refinery, affirmed the Association had concluded plans with its “foreign refinery counterparts and financial partners” to import the best quality of PMS and then sell far lesser than the present selling rate of PMS in Nigeria.

Obele stated: “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 CBN at the the official rate.”

How consumers can get ‘best value’ for oil pricing in a competitive market ─Oil Dealers

PETROAN further said Dangote Refinery’s recent accusation of importing substandard products at cheaper rates is “his usual gimmick for maintaining monopoly.”

The oil marketers also maintained that energy consumers get the best value for pricing when competition is at its peak, hence competition should be encouraged.

Obele further stated that any market devoid of competition would be exploitative and strictly for profiteering.

The Association said: “Petroleum Products Retail Outlets Owners Association of Nigeria PETROAN has successfully incorporated a Strategic Business unit called PETROL.

“PETROAN’s drive was solution-centric and patriotism, following the pricing instability and turbulences in the downstream sector.’

The Association noted: “The reformative and transformational agendas of President are seen as inimical to advocates and beneficiaries of monopolistic market.

“The President intervention was meant to liberalise the downstream sector by building an all-inclusive market.

“Intensive or aggressive competition in any market brings the best value for money exchanged for a commodity.”

The oil marketers averred: “Consumers gets the best value for pricing when competition is at its peak, hence competition should be encouraged.

PETROAN’s moves against purported exploitative oil market and profiteering

The fuel marketers as well stated that contrary to competition, such a market will be exploitative and strictly for profiteering.

The statement noted: “The publication by Dangote Refinery that PETROAN will import substandard petroleum product is not coming as a surprise to stakeholders, because such is his usual gimmick for maintaining monopoly.

“The publication was coming after PETROAN and IPMAN announced plans to sell far lesser than the current Selling rate of PMS in Nigeria.”

The Association said: “It is important to set the records straight that PETROAN has never compared the price of Dangote PMS with any other on the fact that Dangote’s PMS price wasn’t known until this morning (Monday’s) at the press release by Dangote Refinery.

“PETROAN has concluded plans with her foreign Refinery counterparts and financial partners to import the best quality of PMS and then sell far lesser than the present selling rate of PMS in Nigeria.”

It stated: “We planned to enter the market before December 2024, pending the approval of our import permit licence by the regulatory agency and access to foreign exchange from CBN at the official rate.

“Before now, Dangote Refinery has refused to make public her selling rate of PMS until IPMAN and PETROAN announced readiness to sell lesser.”

The statement also noted: “The rate of N990 as announced by Dangote Refinery was inconsiderate, based on the fact Dangote Refinery enjoyed massive concession for accessing Foreign Exchange during the construction of the refinery.

“The core determinant for setting price is consideration for cost of production, then add 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.’

PETROAN argued: “A nation that gave you a yet-to-be-disclosed concession for Foreign Exchange, which was highly criticised by financial experts, 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.

“Goods from the China markets are not selling as high like goods from the America market because cost of production differs.”

On alleged siting of new PMS blending plant at Ibeju-Lekki, Lagos

The oil marketers said: “The allegations that PETROAN will import inferior products and saying 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 with a view to achieving monopoly for exploitation.

“Few months ago the CEO of Dangote Refinery said NNPC Limited was importing inferior Petroleum Products, that his own was far better than what NNPC Limited was selling to marketers.”

PETROAN further explained: “In another press conference, he (Dangote) said the refinery at 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 to enjoy monopoly.”

It stated: “Evidences available showed that diesel (AGO) as a deregulated product was selling less than N800 in Nigeria market few weeks before the commencement of AGO production by Dangote Refinery.

“At the entrance of AGO market by Dangote Refinery, we witnessed a rapid surge above N1,000 as against the perception of a ‘Salvaging Refinery’.”

Commendation for Tinubu on reviving state–owned oil refineries

As regards the ongoing rehabilitation efforts, the oil marketers stated: “PETROAN uses this medium to commend Mr. President for his commitment to revamping of the nation-owned refineries.

“It is on record that the ongoing rehabilitation project never suffers funding under President Tinubu as it was earlier.

“We will still maintain our position by counselling that the Port Harcourt and Warri Refinery plants after rehabilitation should immediately be privatised and handled over to a reputable firm that has the technical capability, managerial skills and financial strength in partnership with PETROAN and other critical stakeholders.”

The Association said: “This will enable the operators of the government-owned refineries to withstand aggressive ballistic competition that will be poised by the known beneficiaries of monopolistic market.

“Antecedents of the beneficiaries of monopolistic market have showed numerous suffocating business owners crashing out of other sectors for a sole operator in the past.”

Obele stated: “A balanced market should be an all-inclusive market, 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 affordable price.

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

PETROAN added: “The only catalyst to trigger PMS 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 DAPPMAN, MEMAN, PETROAN, IPMAN NUPENG and PENGASSAN”, towards proffering a final solution to the PMS pricing in the downstream sector of the economy.

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