Petroleum Depot Owners Urge Tinubu To Sustain Deregulation, Prevent Dangote Refinery Monopoly

The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), has written President Bola Tinubu, urging him to intervene to engender the sustenance of deregulation and free market policies intended by the Petroleum Industry Act (PIA) 2021.

In the letter to the president, DAPPMAN said it recognised the need for the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to remain committed to the legislation establishing it with consistent policies being maintained.

Signed by the organisation’s Executive Secretary, Olufemi Adewole, the group insisted that deregulation and free market were critical to the survival of the industry.

It added that stipulations must remain fair and consistent to achieve the real intent of deregulation and liberalisation of the petroleum sector.

DAPPMAN said that prior to the establishment of the Dangote Refinery, Nigerian business entrepreneurs already had investments in the nation’s downstream petroleum sector running into trillions of naira, with taxes remitted to the various state governments by their respective employers.

The group cited several investments made by Dangote in the past and how they have allegedly monopolised certain sectors, stressing that all its investments in the past would be jeopardised by a Dangote refinery monopoly.

“With hindsight of the foregoing however, we note with dismay  the apparent tilt towards the creation of a monopoly for the supply of Automotive Gas Oil (AGO) to Nigeria’s downstream operators solely by the Dangote Refinery.

 “We understand that this is due to the implementation of the restrictions placed on ECOWAS member nations by ‘Afri 5’ gasoil and gasoline specifications… which have the resultant effect that AGO purchases can only be made from one source being the Dangote Refinery.

“It is on credible record that marketers’ AGO imports have complied with the Afri 5′ gasoil and gasoline specification of sulphur content not exceeding 50/parts per million (ppm) from January 2024 despite the inability of local refining capacity, including the Dangote refinery, to meet this specification to date.

“Dangote Refinery’s AGO presently has sulphur content exceeding 700/ppm in accordance with waiver granted by the NMDPRA. This far exceeds the average of 50/ppm sulphur required for AGO imports by marketers, yet the regulator has restricted all other downstream operators from sourcing this product exclusively from the Dangote Refinery.

“This is a clear adoption of Dangote Oil Refinery as the sole supplier of AGO to the nation. This situation is detrimental not only to the downstream operators but the nation at large. It deprives Nigerians of cheaper options as the Dangote Refinery always has the final say and dictate prices without any competing alternatives,” the group added.

It opined that while AGO had been deregulated and left to market forces for price determination, the regulator must continue to ensure consistent level field policies and issue adequate notices to all and sundry for any changes that may be required in the spirit of deregulation.

 “It is important that market forces are allowed free reign in the sector within appropriate rule of law.

“Dangote refinery’s initial step was to crash the price of AGO from a ‘high’ price of N1,700 per litres to N1,200/litre and later to N1,000 and later to N900/litre despite the large inventory of the imported AGO with marketers which thus could not be sold as it was imported with very high forex rate.

“Marketers with this huge volume of AGO saw the opportunity to reduce their losses when forex rates crashed and the naira appreciated against the dollar as they sought to import cheaper AGO stock to ‘blend’ their retail pump price, reduce their losses and sell off their AGO stock.

“Unfortunately, the regulator came up with the restrictive policy which foreclosed importation of AGO, thereby limiting the product source to only Dangote Refinery.

“We wish to specifically refer to the stakeholders’ meeting between our DAPPMAN members and top management of Dangote Oil Refinery. Regrettably, despite assurances at the meeting, Dangote Refinery continues to offer refined petroleum products to foreign traders at $50 per metric tonne, cheaper than the pricing to local companies, “DAPPMAN said.

Besides, it said that payments for cargo offtakes from the refinery are in dollars, explaining that it believes that trade with Dangote oil refinery should have an option of payment in naira.

“ This will greatly reduce any attraction to trade with international suppliers and significantly reduce the pressure on the naira. We emphasise that all the scenarios listed above are neither in tandem with the spirit of PIA 2021 nor with the Federal Competition and Consumer Protection Act, 2018 (FCCPA) which collectively restrict monopoly of any sort and indeed run contrary to President Bola Tinubu administration’s admirable policies to foster ease-of-doing-business in Nigeria.

“Thus, we respectfully crave the indulgence of Mr. President to urgently intervene in the above situation and our prayers are thus: There should be no restriction or forced limitation of any marketer to be sourcing his product from Dangote Refinery until the Port Harcourt and Warri Refineries are fully rehabilitated and re-streamed to increase local refining capacity and provide price competitive product options tor Nigerians.

“There should be no monopoly of product sourcing and all marketers should be allowed to import fuels into the country in line with internationally recognised healthy product specifications and price competitiveness.

“We hereby assure Mr. President that we in DAPPMAN shall be available and would be willing to further discuss and clarify all the salient issues raised above with a view to providing healthy fuelling alternatives, at competitive rates to our compatriots,” part of the letter read.

Emmanuel Addeh

Follow us on: