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 in a statement issued this Monday 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.
The statement signed by Dr Joseph Obele, National PRO of PETROAN disclosed the association had previously raised alarms about Dangote’s intentions to dominate the downstream sector, citing concerns that the company may leverage its market power to fix prices, limit competition, and exploit consumers, much like it has done in other sectors.
PETROAN warned that 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 introduction of 4,000 brand-new Compressed Natural Gas (CNG)-powered tankers by Dangote Refinery poses a significant threat to the livelihoods of thousands of truck drivers and owners. PETROAN argues that while CNG trucks may offer a lower cost of transporting petroleum products, this shift could lead to widespread job losses in the industry.
The adoption of a forward integration strategy by Dangote Refinery will greatly affect various stakeholders according to PETROAN, including: Modular Refineries, Truck Owners, Filling Station Operators, Local Suppliers of Petroleum Products and Telecom Diesel Suppliers.
“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. This could lead to higher prices, reduced competition, and decreased economic efficiency,” said Obele.
The statement further added that the National President of PETROAN, Dr. Billy Gillis Harry, has called on the Executive Director of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Minister of State for Petroleum to put in place price control mechanisms to prevent any form of monopoly. “Dr. Harry emphasises that competition should always be encouraged to protect consumers and promote economic efficiency”.
While raising concerns over market Monopoly, Job Losses and Unfair Market Practices, PETROAN Recommended that authorities Promote Competition, Strengthen regulatory agencies to monitor market behavior, Support Local Refineries and Mitigate Job Losses by exploring alternative livelihoods for affected workers.
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