PETROAN kicks against Dangote Refinery’s fuel distribution plan

The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has kicked against Dangote Refinery’s move to distribute its petroleum products to outlets nationwide.

Dangote Refinery announced during the weekend that it was getting ready to expand its fuel distribution across the nation.

In a statement on Monday, signed by PETROAN’s national public relations officer, Joseph Obele, the association said this could lead to a monopoly in disguise.

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The association said the development could also pose a significant job loss threat to Nigeria.

The statement reads: “The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has raised concerns about Dangote Refinery’s forward integration adoption, warning that it could lead to a monopoly in disguise and pose a significant job loss threat to Nigeria.

“With a production capacity of 650,000 barrels per day, PETROAN argues that Dangote Refinery should be competing with global refineries, not operating as a distributor in the downstream sector.

“This massive refinery, one of the largest in sub-Saharan Africa, is expected to satisfy domestic fuel demand and export surplus products.”

PETROAN said it had earlier said it raised alarms about Dangote’s plans to dominate the downstream sector, citing concerns that the company may use its market power to fix prices, limit competition, and exploit consumers, “much like it has in other sectors.”

According to the association, Dangote’s tactics “may include a pricing penetration strategy, where they reduce prices to capture market share, with the ultimate goal of forcing other filling station operators to quit the market.”

“This could lead to a massive shutdown of filling stations across Nigeria, resulting in widespread job losses,” the statement reads.

It warned that the introduction of 4,000 new compressed natural gas (CNG)-powered tankers by Dangote refinery “poses a significant threat to the livelihoods of thousands of truck drivers and owners.”

“While CNG trucks may offer a lower cost of transporting petroleum products, this shift could lead to widespread job losses in the industry,” PETROAN said.

The association said the adoption of the strategy by Dangote refinery, will significantly affect various stakeholders, including modular refineries, as their operations and market share may be threatened by Dangote’s dominance.

“Filling Station Operators: Many may be forced to shut down due to Dangote’s pricing penetration strategy and dominance,” the statement reads.

“Local Suppliers of Petroleum Products: Their businesses may be negatively impacted by Dangote’s direct supply to end-users.

“Telecom Diesel Suppliers: Their operations and market share may be threatened by Dangote’s dominance.

“It is obvious that Dangote plans to gain full monopoly of the downstream sector, which would enable the company to exploit Nigeria’s petroleum consumers.”