Friday, December 13, 2024

Dangote refinery tries to maintain monopoly

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

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

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

“Dangote Refinery’s publication that PETROAN will import substandard petroleum products does not surprise stakeholders because that is their usual trick to maintain a monopoly. The release came after PETROAN and IPMAN announced plans to sell much less than the current sales rate of Premium Motor Spirit (PMS) in Nigeria,” the statement said.

Obele stated that the association plans to import high-quality gasoline at a lower price than the current price, citing agreements with refineries and foreign financial partners.

“PETROAN has concluded plans with its foreign refinery counterparts and financial partners to import the best quality of PMS and then sell much less than the current selling rate of PMS in Nigeria. “We plan to enter the market before December 2024, pending 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 exchange rate,” he said.

On Sunday, Dangote Refinery said it sells its petrol at N960 per liter on boats and N990 per liter on trucks.

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The company's group brand and communications director Anthony Chiejina said its prices are benchmarked against international rates, ensuring competitiveness.

At the same time, Chiejina said an international trading company recently contracted a warehouse next to the Dangote Refinery, with the aim of using it to mix substandard products to be dumped on the market to compete with the Dangote Refinery's higher quality output.

In its statement on Monday, PETROAN earlier said the Dangote refinery refused to make public its petrol sales rate until the Independent Petroleum Marketers Association of Nigeria (IPMAN) and PETROAN announced their willingness to sell less.

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

“Consumers get the best value for money when competition is at its peak, so competition should be encouraged. Unlike competition, such a market will be exploitative and strictly for profit,” he said.

The association explained that the exchange rate of N990, announced by Dangote Refinery, was “inconsiderate” because the refinery enjoyed massive concessions to access foreign currency during the construction of the refinery.

“The main determining factor in setting the price is to take into account the cost of production and then add a fair margin. But this was not the case of the determinant of Dangote Refinery's PMS price, as they said, the parameter was the comparison with the international sales rate in the global market.

“A nation that gave a yet undisclosed foreign exchange concession that was widely criticized by financial experts, that country's pricing model should not have been modeled by the selling rate in the international market, but rather should have been the production cost plus a fair margin,” the statement said.

Obele further explained that products from Chinese markets do not sell as expensive as products from the US market because the cost of production differs.

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

“A few months ago, the CEO of Dangote refinery said that Nigerian National Company Limited (NNPC Ltd) was importing substandard petroleum products and that theirs were much better than what NNPC Ltd was selling to marketers. In another press conference, he said that the Malta refinery was only a blending plant and not a refinery. All accusations are aimed at closing the doors for other operators to enjoy the monopoly,” he said.

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According to him, available evidence showed that diesel (AGO) as a liberalized product was selling for less than N800 in the Nigerian market a few weeks before the commencement of AGO production by the Dangote refinery, noting that at the entrance of the AGO market For the Dangote refinery, the country witnessed a rapid rise above 1,000 naira against the perception of a “recovering refinery”.

The association appealed to the federal government to prevent monopoly in the downstream sector, citing the need for a comprehensive meeting of stakeholders to resolve the instability in oil prices.

“A balanced market should be an all-inclusive player, where the market leader enjoys its leadership, while the market competitor serves a certain degree of consumers and the market followers still survive in the market at an affordable price. .

“It is therefore regrettable that the federal government discourages and dismantles any attempt at monopoly in the downstream sector with a view to bringing down the current PMS sales rate,” the statement said.

Mr. Obele added that the only catalyst to bring about the reduction in the price of oil is to initiate competition and

“PETROAN will support the federal government to achieve intensive competition in the sector. Most importantly, the solution to the current downstream sector price turbulence and instability is for Mr. President to delegate or delegate a meeting with all stakeholders including the Tank and Petroleum Products Marketers Association of Nigeria (DAPPMAN). , Major Energy Marketers Association of Nigeria (MEMAN), PETROAN, IPMAN, Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN).

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

Background

Last Tuesday, Aliko Dangote, founder and chairman/CEO of the Dangote Group, said his refinery has more than 500 million liters of gasoline in stock, but marketers have not purchased the product.

He questioned why the NNPC and private retailers continued to import gasoline when its refinery could produce enough.

READ ALSO: Dangote Refinery finally reveals gasoline prices

“So I hope NNPC Ltd and the marketers stop importing; They should come and pick up what they need,” Dangote said on Tuesday.

Dangote did not say how long the 500 million liters of gasoline had been refined and stored at 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 its refinery was unable to meet the required volume of gasoline requested by NNPC Ltd for three weeks.

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

Last Thursday, Dangote Refinery said it has not received any payment for the purchase of refined petroleum products from IPMAN. The company made this known after marketers stated that they had not been able to load gasoline from the refinery for days.

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