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

The association made this known in reaction to the refinery’s claim that anyone importing petrol at lower prices would likely be bringing in substandard products, posing risks to health and the environment.

PETROAN, in a statement signed by its National Public Relations Officer, Joseph Obele, on Monday, claimed that recent claims by Dangote Refinery that PETROAN was importing substandard petroleum products were “regular gimmicks” to maintain dominance.

“The publication by Dangote Refinery that PETROAN will import substandard petroleum products is not a surprise to stakeholders as this is his usual ploy to maintain a monopoly. The publication comes after PETROAN and IPMAN announced plans to sell much less than the current rate of sale of Premium Motor Spirit (PMS) in Nigeria,” the statement read.

Mr. Obele claimed that the association plans to import high-quality gasoline at a lower price than the current tariff, citing agreements with foreign refining counterparts and financial partners.

“PETROAN has entered into plans with its foreign refining counterparts and financial partners to import the best quality PMS and then sell it at much less than the current selling rate of PMS in Nigeria. We aim to enter the market before December 2024, pending approval of our import authorization by the regulatory agency and access to foreign exchange from Central Bank of Nigeria (CBN) to the official course,” he said.

On Sunday, Dangote Refinery said it was selling its petrol at N960 per liter in ships and N990 per liter in trucks.

The company’s general manager of branding and communications, Anthony Chiejina, said its prices are benchmarked against international rates, ensuring competitiveness.

At the same time, Mr. Chiejina said an international trading company recently engaged a warehouse near Dangote Refinery with the aim of using it to blend substandard products that will be dumped into the market to compete with Dangote Refinery’s superior output.

In its statement on Monday, PETROAN said until now, the Dangote refinery had refused to make public the petrol sales rate until the Independent Petroleum Marketing Association of Nigeria (IPMAN) and PETROAN announced that it was prepared to sell less.

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

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

The association explained that the rate of N990 as announced by Dangote Refinery was “ill-considered” on the basis that the refinery enjoyed massive concessions for access to foreign exchange during the construction of the refinery.

“The basic determinant of pricing is taking into account the cost of production, then adding a fair margin. But it was not the case of PMS price determinant by Dangote Refinery, as they said, the parameter was comparison with the international selling rate in the global market.

“A nation that has given you an as yet undisclosed foreign exchange concession that has been highly criticized by financial experts, such a country’s price template should not have been shaped by the rate of sale on international market, but rather it should have been the cost of production plus a fair margin,” the statement said.

Mr. Obele further explained that goods in Chinese markets do not sell as much as goods in the American market because the cost of production differs.

“Allegations that PETROAN will import inferior products and also that an international company is trying to set up a PMS blending plant in Lagos are all strategies for Dangote Refinery to push others out of the market in order to gain monopoly for exploitation.

“A few months ago, the CEO of Dangote Refinery said that Nigerian National Company Limited (NNPC Ltd) he was importing inferior petroleum products, that his was far better than what NNPC Ltd was selling to traders. In another press conference, he said that the Malta refinery is only a blending plant and not a refinery. All the allegations are aimed at closing the doors of other operators to enjoy monopoly,” he said.

According to him, available evidence showed that diesel fuel (AGO) as a deregulated product was selling for less than N800 in the Nigerian market weeks before Dangote Refinery started production of AGO, noting that upon the entry of AGO into the market by Dangote Refinery , the country witnessed a rapid growth of over N1,000 against the perception of a “bailout refinery”.

The association appealed to the federal government to prevent monopoly in the downstream sector, citing the need for a meeting of all stakeholders to resolve the volatility of petrol prices.

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

“Therefore, it is penitent that the Federal Government should discourage and dismantle any attempted monopoly in the downstream sector with a view to collapsing the current PMS sales rate,” the statement said.

Mr. Obele added that the only catalyst that triggers the reduction in the price of petrol is the introduction of competition and

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

“This meeting tends to get valuable first-hand information from industry players to have a final solution for PMS pricing in the downstream sector,” he said.

Background

Last Tuesday, Aliko Dangote, founder and Chairman/Chief Executive of the Dangote Group, said his refinery has over 500 million liters of petrol in stock but traders have not bought the product.

He asked why NNPC and private traders were still importing petrol when his refinery could produce enough.

READ ALSO: Dangote Refinery finally reveals petrol price

“So, I expect NNPC Ltd and marketers to stop importing; they should come and collect what they need,” Mr Dangote said on Tuesday.

Mr. Dangote did not say how long the 500 million liters of gasoline were refined and stored by his 650,000 barrel per day refinery.

However, PREMIUM TIMES reported that data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) showed that its refinery could not meet the required volume of petrol sought by NNPC Ltd for three weeks.

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

Last Thursday, Dangote Refinery said it had not received any payment for the purchase of refined petroleum products from IPMAN. The company made this known in reaction to marketers’ claim that they were unable to load gasoline from the refinery for days.