Petrol Pricing: PETROAN accuses Dangote of attempting to suppress competition

25

The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has accused Dangote Refinery of attempting to suppress competition in the downstream sector.

The marketers’ accusation follows Dangote Refinery’s claim that marketers are criticising its petrol prices because they wish to import substandard products at cheaper rates.

In a statement on Sunday, the refinery disclosed that it sells petrol at N990 per litre for trucks and N960 per litre for ships, stating that these prices align with international rates.

The statement from Dangote Refinery came after both PETROAN and the Independent Petroleum Marketers Association of Nigeria (IPMAN) claimed they could purchase petrol at rates lower than those offered by Dangote.

In response, the refinery asserted that only substandard products could be imported at rates below its own.

In a statement signed by its spokesperson, Joseph Obele, on Monday, PETROAN argued that Dangote’s accusation of importing substandard products is a “typical tactic to maintain monopoly.”

The marketers emphasised that consumers benefit most when competition is strong, and therefore, competition should be encouraged.

PETROAN also announced plans with its foreign refinery counterparts and financial partners to import high-quality PMS and sell it at a price significantly lower than the current rate in Nigeria.

The statement reads: “The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has successfully incorporated a Strategic Business Unit called PETROL.”

PETROAN stated that its initiative is driven by patriotism and a desire to stabilise pricing in the downstream sector amidst recent fluctuations.

PETROAN argued that aggressive competition in any market leads to better pricing for consumers. In contrast, a lack of competition fosters exploitation and profiteering.

The association expressed concerns over Dangote’s publication accusing PETROAN of intending to import substandard products, describing it as a predictable move to maintain a monopoly.

“The publication followed PETROAN and IPMAN’s announcement of plans to offer petrol at prices significantly below the current rates.”

PETROAN clarified that it has never directly compared its pricing to Dangote’s, as Dangote’s petrol price was only revealed in the refinery’s recent press release.

PETROAN also noted that it has finalised arrangements with international partners to import premium PMS and aims to enter the market by December 2024, pending regulatory approval and access to foreign exchange at the official rate.

The association added: “Until now, Dangote Refinery refrained from disclosing its petrol prices until IPMAN and PETROAN announced their readiness to sell at a lower rate.”

PETROAN also criticised the refinery’s pricing of N990 per litre, noting that Dangote Refinery benefitted from substantial foreign exchange concessions during its construction.

“A fair pricing model should consider production costs with a reasonable margin, not simply follow global market rates,” PETROAN argued.

PETROAN also dismissed allegations that it intends to import inferior products, suggesting that Dangote’s claims were aimed at monopolising the market.

PETROAN highlighted the recent rise in diesel prices, from under N800 to over N1,000, as an example of how monopolistic practices can inflate costs for consumers.

The association commended President Tinubu’s commitment to rehabilitating state-owned refineries, suggesting that, once complete, the Port Harcourt and Warri refineries should be privatised and managed by a reputable firm in partnership with PETROAN and other key stakeholders.

PETROAN urged that the privatisation process should be transparent, using Indorama Petrochemicals as a model, rather than relying on Maintenance Repairs and Operations (MRO) contracts.

PETROAN concluded by calling on the federal government to dismantle any attempts at establishing a monopoly in the downstream sector, emphasising that the best way to reduce PMS prices is to encourage robust competition.

The association further proposed that President Tinubu should convene an inclusive stakeholders’ meeting with groups such as DAPPMAN, MEMAN, PETROAN, IPMAN, NUPENG, and PENGASSAN to obtain valuable input from industry players to resolve the ongoing pricing challenges in the downstream sector.