Petrol Pricing: PETROAN Accuses Dangote Of Trying To Stifle Competition

Posted by African Examiner Featured, Latest Headlines, News Across Nigeria Tuesday, November 5th, 2024

(AFRICAN EXAMINER) – Petroleum Products Retail outlets Owners Association of Nigeria (PETROAN) has accused Dangote Refinery of trying to suppress competitors in the downstream sector.

The marketers’ accusation follows Dangote Refinery’s claim that marketers are complaining of its petrol pricing because they want to import substandard products at cheaper rates.

The refinery had in a statement on Sunday disclosed that it sells petrol at N990 per litre in trucks and N960 per litre into ships. It says its pricing is in comparison with the international selling rate at the global market.

The disclosure by Dangote Refinery was after both PETROAN and the Independent Petroleum Marketers Association of Nigeria (IPMAN) had said that they can buy petrol at cheaper rates than Dangote rates.

The refinery in its reply said that only substandard products can be imported at cheaper rates than its rates.

But PETROAN in the latest in a statement signed by its spokesperson, Joseph Obele, on Monday, said the accusation of importing substandard product by Dangote is “his usual gimmick for maintaining monopoly.”

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

They added any market devoid of competition will be exploitative and strictly for profiteering.

PETROAN said it 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.

The statement reads: “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 reformative and Transformational agendas of President is seen as inimical to advocates and beneficiaries of monopolistic market. The President Interventions 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 exchange for a commodity. Consumers gets the best value for pricing when Competition is at it’s peak, hence Competition should be encouraged.

“Contrarily to Competition, such a market will be exploitative and strictly for profiteering. The publication by Dangote refinery that PETROAN will import sub standard 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.

“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 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.

“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.

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

“The rate of #990 as announced by Dangote refinery was inconsiderate base 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.

“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.

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

“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 in view achieving monopoly for exploitation.

“Few months ago the CEO of Dangote Refinery said 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 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.

“Evidences available showed that diesel (AGO) as a deregulated product was selling less than #800 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 #1,000 as against the the perception of a “SALVAGING REFINERY”.

“PETROAN uses this medium to commend Mr President for his commitment towards the 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 plant 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.

“This will enable the Operators of the government owned refineries to withstand aggressive ballistic Competition that will be poise by the known beneficiaries of monopolistic market. Antecedents of the beneficiaries of Monopolistic market has showed numerous suffocating Business owners crashing out of other sectors for a sole operator in the past.

“Stakeholders concerns is a prayer that the process of the Privatisation should be
transparent using the Indorama Petrochemicals as a model as against Maintenance Repairs And Operations (MRO) contract Business scholars have described the red ocean strategy as a situation when companies try to outperform their rivals to grab a greater share of existing demand.

“While Some other business scholars argued that it is detrimental to adopt the red ocean strategy with the motive for making your competitors quit in view of acquiring their facilities, because such market will be a Monopolistically orchestrated market in view of exploiting the people.

“A balance market should be an all inclusive market players 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. 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.

“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.”